Abstract: Supply chain has increasingly become a main mode of competition in the market. Once a retailer in the supply chain falls into financial distress， it will be passed on to others by quantity of goods， which may lead to a distress of the whole supply chain. In a two-stage supply chain with a single manufacturer and retailer， based on the business effort level and effort cost， the process of how financial distress goes from the retailer to the manufacturer was described and the manufacturer’s decision-making under the centralized financial distress was explored under various contexts. The results showed that in the case of lighter distress ， both the manufacturer and the retailer tend to adopt the centralized decision-making， and in a severe predicament， the manufacturer should change decisions or cancel strategic partnership to prevent the transmission of financial distress. Finally， an example is given to illustrate the specific application of the decision model and verify its feasibility.

Key words: financial distress, transmission, decision model, supply chain, centralized decisionmaking