Abstract: In the context of upstream supply constraints, in order to ensure the effective operation of the supply chain, an decision model (Strategy 1) involving ordering and pricing decisions between the manufacturer and the brand owner is established in a supply chain where the brand owner adopts a "control" procurement mode, by introducing a supplier with capacity constraints and economies of scale. Furthermore, based on the classic competition-cooperation model, a game model (Strategy 2) is developed for the manufacturer to open direct sales channels. Through theoretical analysis of the game model, the equilibrium results in the supply network are obtained. Combining analytical and numerical analysis, the effects of competition-cooperation games and manufacturer strategic preferences are examined in two scenarios: the extreme high price procurement (for components) and the free-riding procurement. Different from the existing models, this study incorporates the component procurement processes of both manufacturers and brand owners, resulting in a circular supply structure and revealing the effect of exchanging orders through channels. The conclusions of this study can provide suggestions for the transformation and upgrading of manufacturers under supply constraints.

Key words: procurement mode, competition and cooperation, capacity constraints, game, ordering-price decision