Should suppliers allow capacity transfers?
Neda Khanjari, Izak Duenyas, Seyed M.R. Iravani
Production and Operations Management · 2022 · Volume 31 · Issue 5
Abstract
This research considers situations in which buyers pay to reserve their suppliers' capacity for future use. The study specifically explores whether suppliers should provide transfer rights, allowing buyers unable to use all of their reserved capacity to transfer the excess to another buyer, and whether they should charge a transfer fee. The study finds that, in most cases, the supplier maximizes financial outcomes when the buyer releasing the excess capacity keeps most of the retail-level profit from the transfer and the supplier does not charge a transfer fee.
Keywords
buyer–supplier negotiation, capacity management, capacity transfer fees
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