Coordinating a three level supply chain in a price-sensitive demand environment

Supply chain coordination is one of the important issues in supply chain management. In the literature, quite a good number of models have been developed to coordinate two-stage supply chain under different situations. However, there has been little research on modelling supply chain coordination in more than two stages. In this paper, we have developed a three-level coordination model with price sensitive market demand and variable production rate of the manufacturer. An all-unit quantity discount scheme is used to coordinate the entire channel and a mechanism is proposed to share the coordination benefit based on the relative bargaining power of each channel member. Finally, a numerical study is carried out to illustrate the efficacy of the model.