Abstract:  Aiming to investigate the incentive mechanism for different service levels provided by the manufacturer in a dual-channel supply chain, the decision models of service cooperation are developed using the principal-agent theory on the assumption that the manufacturer′s service demand is achieved by the retailer. Then, the optimal fixed payments and the optimal profit-sharing ratios are obtained under symmetric information and asymmetric information, in addition to influence analysis of asymmetric information on cooperation performance. The conclusion implies that the manufacturer′s profit decreases under asymmetric information, the retailer′s profit remains the same even when lower service level is provided. However, the system performance of the supply chain decreases.

Key words:  supply chain, dualchannel, service differentiation, incentive mechanism