We considered a simple single-vendor, single-buyer supply chain system, in which the buyer’s ordering lead time is affected by purchasing price discounts which in turn are affected by the vendor’s pricing policy. Both parties in the supply chain system have conflicting goals: the buyer wants to minimize his total cost while the vendor aims to maximize his total profit. In order to guarantee the mutual interest of both parties, we have developed a mathematical model to illustrate how the best supply chain system benefit can be achieved through coordinating the buyer’s ordering lead time and the vendor’s pricing policy. For practical purposes, risk costs and the effect of imperfect quality are also included in the model. A numerical example and related sensitivity analysis are given to show the effectiveness of the proposed model.

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