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This paper investigates a two-stage supply chain consisting of a capacitated supplier and a retailer that faces a stationary random demand. Both the supplier and the retailer employ base stock policies for inventory replenishment. All unsatisfied demand is backlogged and the customer backorder cost is shared between the supplier and the retailer. We investigate the determination of decentralized inventory decisions when the two parties optimize their individual inventory-related costs in adoi:10.1080/07408170601180536 fatcat:qlr2y24vnjh2bdctyktlaukvfu