Optimal quantity discount coordination for supply chain optimization with one manufacturer and multiple suppliers under demand uncertainty

In this paper, a coordination strategy is developed to integrate business decisions and manufacturing planning in supply chain management. We consider one manufacturer and multiple suppliers to determine production, prices, and inventory simultaneously with uncertain demands. This paper aims at providing an optimal discount policy derived from Stackelberg equilibrium to coordinate a manufacturer and multiple suppliers. The optimal discount coordination mechanism helps the manufacturer to select suppliers in order to maintain long-term relationship with the contracted suppliers under demand uncertainty. Noncooperative game is applied in order to resolve decision-making in order to determine quantities of components, price, production, and selection of suppliers simultaneously. Computational experiments are conducted to demonstrate the effectiveness and efficiency of the proposed approach.