“…Efforts have been made in the development of coordination mechanisms, aiming to allow a decentralized supply chain to perform as effectively as a centralized one does by aligning chain members' objectives with a chainwide objective (Thomas and Griffin, 1996). Efforts have also been made in exploring sourcing strategies in a decentralized supply chain, as multiple sourcing is not uncommon in various industrial sectors (Agrawal et al, 2002;Chiang and Benton, 1994;Hong and Hayya, 1992;Treleven and Scheikhart, 1988), and in analyzing the dynamics of interaction among chain members (Cachon and Zipkin, 1999;Leng and Parlar, 2005;Moses and Seshadri, 2000). This paper adds to these growing efforts of improving supply chain effectiveness by analyzing a two-supplier supply chain in which the suppliers with capacity uncertainties sell their differential but substitutable products through a common retailer facing price-sensitive random demand of these two products.…”