An order quantity negotiation model for distributor-driven supply chains

We propose a negotiation process to find a contract for a distributor and a manufacturer in a supply chain. The contract is to determine supply quantities from the manufacturer to the distributor for multiple products from different production facilities over time for given prices set by the market. This negotiation process is for distributor-driven supply chains in that the distributor leads the negotiation process by submitting its profit-maximizing order quantities within, while the manufacturer can supply up to the ordered quantities. Numerical studies demonstrate that the proposed negotiation process, while requiring the minimum information revelation to partners, achieves small gap from the solutions of ideal centralized planning model that requires complete information sharing.