Abstract:Because of the vertical and horizontal competitions, a decentralized supply chain system can not usually reach the efficiency of the integrated supply chain. Therefore, the linear transfer payment contract is introduced in this paper. It shows that the supply chain can be coordinated by selecting a proper reward and punishment factor and the least sales scale being restricted within a certain interval. Under this contract system, the efficiency of decentralized supply chain equals that of integrated supply chain. In the end, an algorithm is presented to illustrate our conclusion