Coordinating quality decisions in a two-stage supply chain under buyer dominance

We consider a two-stage supply chain with imperfect quality products where the screening time acts as a decision variable affecting the quality level of the batch and influences costs and consumer demand. Our investigation centers on the seller–buyer relationship, exploring coordinated and non-coordinated buyer-dominated contracts. We propose an optimization model to analyze the impact of quality decisions, buyer dominance, and coordination. We provide analytical solutions and support them with numerical examples to illustrate the consequences of corresponding decisions for overall profitability under various assumptions.