Optimizing Pricing and Lot Sizing Decisions in a Supply Chain under Quantity Discount contract

Nowadays, because of extreme competition between organizations and companies, the profit of selling products has become a challenging issue. Thus in this research we examine this issue and study the profit of organizations by designing quantity discount contract. In this paper we consider a two-level single item supply chain including a manufacturer and a retailer. The demand function depends on quality level and selling price and two conditions are studied. In the first one, decentralized condition is mentioned, for which a mathematical model is presented. In the second condition, a mathematical model for designing quantity discount contract between the members is developed and in this part the given relations are described. The main aim of this research is to assist the organizations and companies to increase their revenues, by designing the quantity discount contract. At the end a numerical example is provided to explain this research more explicit and then sensitivity analysis is performed. When all calculations are done, we discuss about results and moreover we show that how quantity discount contract can increase the profit chain rather than when this policy is not used which this issue can be noteworthy and operational for the managers of the organizations.