Abstract: Considering a supply chain selling one type of product with multi-period and probabilistic custourer demand,we assume the freight cost of unit product is sensitive to order quantity and the manufacturer undertakes products transportation,the optimal lot size models in decentralized decision are presented.The analytical result shows that the more rigid the freight cost of unit product to order quantity is,the smaller the optimal production lot size is,which is in accordance with short order lead time and small order quantity that claimed by the wholesaler.And,if the wholesaler,not the manufacturer,undertake products transportation,the optimal order quantity of the wholesaler will be closer to the optimal production lot size of the manufacturer.Finally,the numeral analysis shows that from the perspective of the manufacturer,when the freight cost of unit product is rigid to order quantity,the quantity discount policy is superior to the tactic of the wholesaler replacing the manufacturer to undertake products transportation.However,when the freight cost of unit product is sensitive to order quantity,vice versa.

Key words: supply chain, totsize model, coordination tactics