Abstract: There are interactions between upstream strategic transfer pricing commitment and downstream innovation in a supplier-manufacturer channel, which strongly affect supply chain cooperation mode and the partners' behavior preferences. Based on routing flexibility and supply chain performance dimensions, say, committed delivery lead time, innovation investment, production quantity and profit, in this parer a strategic transfer pricing commitment model is formulated to provide a view of issues concerning supply chain cooperation mode, with combining the above mentioned static interactions and different flexibility levels into dynamic supply network configuration. By so doing, can at least five interactions be identified, say, i) FF Flexible transfer pricing, Flexible production quantity), ii]) CF(Committed transfer pricing, Flexible production quantity), iii) CO(Committed transfer pricing, Without delivery time uncertainty), iv) IW(Integrated supply chain, With delivery time uncertainty), v) IO(Integrated supply chain, Without delivery time uncertainty). With considering the supply chain routing flexibility and applying sample simulation analysis method, at least three conclusions can be obtained, I) Flexible supply network configuration is an important method for supply chain partners and supply chain as a whole to obtain performance improvement. Comparing with no flexibility, maximal and partial flexibility can help to improve performance, and maximal flexibility assumes the most priority in this process. II) Although partial flexibility is a feasible flexibility configuration, it arouses disequilibrium of network resources between supply and demand. III) Flexibility level and each partner's ability are two dominant dimensions to distinguish profit performance between integrated decision with uncertainty and transfer pricing commitment without uncertainty, and further influence the selection of supply chain cooperation mode and behavior preference. Sample simulation analysis in this paper, in which data is partly adopted and modified use for reference of the researches done by Cho and Gerchak^[14] and Wadhwa et al.^[4] helps to confirm the above deduction and provides a view for further research of the interactions that exist between optimal cooperation modes and behavior preferences.

Key words: supply network, transfer pricing commitment, supplier selection, flexibility level