Dual-Sourcing Supply Chain Coordination

This paper studies a supplier-retailer chain problem with dual-soucing channels for the retailer: ordering from the supplier and producing by himself. Customers' demand is assumed to be linear. We find the buy-back contract can not coordinate our model. A numerical example indicates that the buy-back contract is a better strategy for both the supplier and the retailer than the wholesale price contract, and the supplier's participation increases the retailer's expected profit.