Abstract: Proper contract is used as an important way to coordinate supply chain.In a supply chain composed of one retailer and one supplier,the sales promotion effort level of a retailer has a big effect on supply chain efficiency.In this paper a linear transfer payment incentive mechanism is designed,and it is proved that with the mechanism the retailer will exercise the supply chain optimized sales promotion effort level,and the profit of the supply chain will get better,and the allocation of the added profit is decided by the bargain power of the retailer and supplier.

Key words: supply chain management, incentive mechanism, supply chain contract