Integration strategies of two supply chains with complementary products

This paper studies the manufacturer's and retailer's integration strategies in a supply chain with complementary products and examines the effects of downstream, upstream and vertical integrations on supply chain members' decisions and profits and on supply chain performance. The centralised and decentralised decision models are considered as benchmarks that are compared to downstream, upstream and vertically integrated strategies. Our comparison and analysis show that the total profit of the supply chain increases with the number of integrated players and that vertical integration can be more profitable than that of upstream and downstream integrations. However, to our surprise, the upstream and downstream integration strategies do not affect the total profit.