Abstract: Based on the consignment stock and the condition that demand forecast accuracy can be improved, the model of ordering lot sizes in a supply chain with one-manufacturer and one-retailer is established. The results illustrate that if demand forecast accuracy is certain, the benefit of manufacturer is consistent with the whole supply chain when the manufacturer decides the transfer price of product. When demand forecast accuracy may be improved, the income of the whole supply chain in the supply chain decentralized decision is less than centralized decision because of less investment of the retailer in improving demand forecast accuracy. When the ratio of the inventory capital taking up cost to the warehousing cost of product is higher, it has benefited both parties by sharing the cost of improving demand forecast accuracy, thus make the whole supply chain achieve Pareto optimization, but can not maximize the benefit of the supply chain. Moreover, the larger this ratio is, the more proportion of cost in improving demand forecast accuracy the manufacturer is willing to share with the retailer. However, the higher the ratio or the uncertainty of product demand is, the supply chain centralized decision based on the mechanism of cooperating revenue sharing with between the manufacturer and the retailer has significant advantage over the strategy of cost sharing with both only in improving demand forecast accuracy.

Key words: Consignment stock, Demand forecast accuracy, Investment coordination, Supply chain