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Trading reserved capacity independently among supply chains

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

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.

Suggested Citation

  • Hung, Yick-Hin & Li, Leon Y.O. & Cheng, T.C.E., 2011. "Trading reserved capacity independently among supply chains," International Journal of Production Economics, Elsevier, vol. 133(1), pages 105-112, September.
    • Handle: RePEc:eee:proeco:v:133:y:2011:i:1:p:105-112
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    References listed on IDEAS

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    Cited by:

    1. Hung, Yick-Hin & Li, Leon Y.O. & Cheng, T.C.E., 2013. "Transfer of newsvendor inventory and supply risks to sub-industry and the public by financial instruments," International Journal of Production Economics, Elsevier, vol. 143(2), pages 567-573.
    2. Katsaliaki, Korina & Kumar, Sameer & Loulos, Vasilis, 2024. "Supply chain coopetition: A review of structures, mechanisms and dynamics," International Journal of Production Economics, Elsevier, vol. 267(C).

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