A key issue in supply chain design for manufacturing firms is how to make a trade-off between the degrees of vertical integration.This paper studies this issue by a single period supply chain model with one supplier and one manufacturer.For the manufacturer,all the components needed for building the final product are divided into two classes:core and non-core.For the non-core components,the manufacture can either in- vest in building its own production capacities so as to promote the ratio of ba...