Abstract: Based on four-stage Stackelberg game theory, how to design product quality control strategy in the three-echelon supply chain is studied. A game model which composed by manufacture, retailers and customers is constracfed. The manufacture will make the product quality decision (high product quality or low product quality), the retailers will make the product purchasing decision and retail pricing decision, and the customers will make ordering quantities decision. When the retailers purchase high quality product, the manufacture will provide price discount strategy. When the retailers purchase low quality product, the manufacture will provide delay payment strategy. Optimization theory is used to solve the manufacture's product quality level, price discount, delay payment period, retailer’s retailing price, customer’s ordering quantities and expected profits function. The results of a numerical example show that: the retailing price of high product quality has a more decreasing according to price discount, the retailing price of low product quality has a more decreasing according to delay payment period; when the manufacture provide price discount much more and delay payment period much longer, the manufacture’s expected profits will reduce, retailer’s expected profits will increase, customer’s ordering quantities will also increase; the manufacture’s joint expected profits are inverse U-shaped. The maximum expected profits and contract parameters are solved, which demonstrate that the product quality control strategy is effective.

Key words: three-echelon supply chain, product quality control strategy, price discount, delay payment