Stackelberg Purchasing Model for Emergency Materials under the Circumstances of Advance Payment

By applying advance payment model for the purchase of its emergency materials, the government can reduce the purchasing cost under the traditional model and save the cost for daily inventory, while letting the enterprise get circulating funds without interest. This paper reviews the traditional purchasing theories, establishes a two-level purchasing model between government and enterprise, and then gets the optimal strategy by using the Stackelberg Game theories. Finally, this paper ends up with a case study and sensitivity analysis of the effects on the optimal strategy.