Abstract：Reliable supply is of great importance to supply chain members, and a retailer can use a subsidy on the unit wholesale price or on the reliability cost proportion to motivate a supplier to improve the supply reliability. In this paper, we establish a Stackelberg game model led by the retailer and the supplier is the follower. The theory is used to find the optimal solutions and the influence of each parameter variation on the optimal solution is analyzed under different incentive strategies. Numerical simulations show that the optimal profit of the retailer and the supplier are proportional to the market demand and affected by the purchasing and incentive strategies. With the increase of reliability cost coefficient, the retailer’s optimal profit decreases; the supplier’s optimal profit decreases when supply is unreliable and increases when supply is reliable.
