Trading reserved capacity independently among supply chains

Yick-Hin Hung, Leon Y.O. Li and T.C.E. Cheng

International Journal of Production Economics, 2011, vol. 133, issue 1, 105-112

Abstract: We propose a novel mechanism for pooling the reserved capacity (super capacity) of different supply chains, so that they can more effectively match their single-period inventory supplies with their demands. Through this mechanism, retailers can buy or sell unutilized super capacity independently as a commodity in a sub-industry before and during the selling season, which helps improve supply flexibility and increase the utilization of suppliers' reserved capacity. Our findings provide a new channel coordination strategy for a group of supply chains to hedge against capacity and inventory risks by trading super capacity with their competitors, which yields individual and aggregate benefits.

Keywords: Super; capacity; Alternative; inventory; Co-opetition; game (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:133:y:2011:i:1:p:105-112

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