A Revised Quantity Flexibility Contract Model for Three-level Supply Chain

In supply chain management, the members always take actions to maximize their own profits without considering the impacts on other members. Therefore, to deal with the complicated problems in the supply chain, it is necessary to set up a feasible coordination mechanism to affect the decisions making and the allocation of risks and profits between the members. According to previous studies, this paper puts forward the revised quantity flexibility contract based on the quantity flexibility (QF) contract. An analytical model in three levels (manufacturer-distributor-retailer) is proposed to evaluate the impacts of supply chain contracts on the profits of each member and the supply chain. This paper aims to explore the feasibility of the revised QF contract by comparing the performance measures of three cases. The proposed model demonstrates that the revised QF contract is an effective mechanism to improve the profit of the supply chain and keep the cooperative relationship as long as possible.