Profit Coordination Modeling of Two-Level Supply Chain

The two-level supply chain is known as the most basic structure of supply chain. In this paper, some profit models are established to get to the global optimum of the profit in a two-level supply chain. And by analysis of the characteristics of the two-level supply chain, the function of demand is designed and carefully structured, and the profit functions can come to the optimum by further solving. Both the optimization of global profit and local profit are discussed to consider the Nash equilibrium. With the parameters determined, an example is displayed to simulate the situation. The results and analysis will surely be positive to the strategic decision of coordination mechanism and optimization of the whole supply chain system.