Abstract: Purchasing plays a very important role in the practical operations for some companies. Many companies will purchase jointly in order to reduce the operational cost. Although many purchasing coalitions collaborate on the procurement, they still compete in other fields such as order quantity or price. Therefore, there is an interesting problem needed to solve, that is, how the farsighted stable structure of purchasing coalitions will be. In a two-echelon distribution supply chain formed by a single supplier and three competing retailers, the farsighted stable structure of purchasing coalition among retailers is analyzed by using the concept of farsighted largest consistent set(LCS) in the cooperative game theory under different discount schedules. It is found that the stable structure of competing retailers' purchasing coalition depends on the discount scale when the supplier provides a linear discount schedule. If the discount scale is low (less than 0.5), horizontal competing retailers will form a two-retailer purchasing coalition, the third retailer will be ruled, and if the discount scale is higher (more than 0.5), horizontal competing retailers will form the grand purchasing coalition, in order to enhance the competitiveness. However, when the supplier provides a two-part tariff discount schedule, the stable structure is always the grand purchasing coalition regardless of discount scale. In addition, it is also found that the grand coalition will be the stable structure for the farsighted retailers under other discount schedules by the numerical examples. This paper will provide some reasonable and operational suggestions for farsighted retailers form coalitions.

Key words: distribution supply chains, cooperative game, purchasing coalition, farsighted retailers