Abstract: This paper constructs a three-level supply chain model, which includes a single supplier, a single manufacturer and a single retailer. Firstly, the equilibrium solutions are given. In addition, the paper investigated the effects of manufacturer′s productivity and the parameter of supplier′s cost function on central decision-making and decentralized decision-making,and the effects of these two parameters on optimal price, optimal output and optimal profit under different decision mechanisms. The results show that the profit difference between central and decentralized decision-making is positively related to the manufacturer productivity, but is negatively related to supplier cost parameter;the improvement of manufacturer productivity will reduce the prices of manufacturer and retailer, and it will lead to increasing of the price of upstream supplier, however, the price of each member is positively related to the cost parameter of supplier;the improvement of manufacturer productivity will lead to an increase of manufacturer output, and the impact on supplier output is uncertain,however, both outputs are negatively related to the cost parameter of supplier. There are similar conclusions under central decision-making. The corresponding numerical analysis verifies the results of theoretical analysis.

Key words: central decision-making, decentralized decision-making, manufacturer′s productivity, three-level supply chain model, numerical analysis