The Principal-Agent Model of Trade Promotion Strategies in Supply Chain
HUANG Xiao yuan, LU Zhen, ZHANG Zhe (School of Business and Management, Northeastern University,Shenyang 110004,China,
There are principal agent relations between supply, manufacture and distribution stages in supply chain. The principal agent model of supplier, manufacturer and consumer was given for the relations. The object function of manufacturer(principal) is profit maximum. The incentives of distributor (agent) is that his profit should be more than sale income at least. The participant condition of distributor is a set of dynamic equation. Control variables of the model are discount and advertisement cost. The model above was transformed to a extremum model without restriction.