Decision-Making Model for Outsourcing in Supply Chain

In order to meet the demand of outsourcing decision-making in a supply chain, an outsourcing model was proposed, and the capacity investment levels and production decisions of an upstream firm (supplier) and a downstreammember(buyer) were analyzed under the condition of their making decisions separately. In addition, the patterns of outsourcing based on a price-focused contractwere discussed. Based on the above, a two-stage dynamic game model for two members in a supply chain was set up, and it was proven that this game model characterizes the sub-game perfect Nash equilibrium.