Should suppliers allow capacity transfers?

Khanjari, Neda; Duenyas, Izak; Iravani, Seyed M. R.

doi:10.1111/poms.13687

Cited by 4 publications

(6 citation statements)

References 29 publications

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“…With a view toward maximizing the service level, Jiang et al (2022) explore how to allocate a shared capacity to fulfill customer demands with individual service levels. Khanjari et al (2022) focus on the supplier's problems of whether to allow buyers to transfer unused capacity to other buyers and how much to charge for the transfer. They allow the demand faced by buyers to be dependent, but they do not model competition among buyers.…”

Section: Literature Reviewmentioning

confidence: 99%

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Benefits of Collaboration on Capacity Investment and Allocation

Ahn,

Çetinkaya,

Duenyas

et al. 2024

Production and Operations Management

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This paper studies how capacity collaboration can benefit two competing firms. We consider a two-stage model where capacity decisions are made in the first stage when there are significant uncertainties about market conditions, and then production decisions are made in the second stage after most of these uncertainties are resolved. We vary the degree of collaboration between the two firms in their capacity and production decisions, examining multiple models and comparing the outcomes. We find that a firm can benefit from collaboration even with its competitors. Interestingly, the firms do not have to make production decisions jointly to realize the benefits of collaboration. Additionally, while collaborative capacity investment proves beneficial, collaborating on production with existing capacity can often yield greater benefits. We find that the advantages of collaboration are most pronounced when competition intensifies, demand fluctuates significantly, and investment costs are high.

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Section: Literature Reviewmentioning

confidence: 99%

“…(2022) explore how to allocate a shared capacity to fulfill customer demands with individual service levels. Khanjari et al. (2022) focus on the supplier’s problems of whether to allow buyers to transfer unused capacity to other buyers and how much to charge for the transfer.…”

Section: Literature Reviewmentioning

confidence: 99%

Benefits of Collaboration on Capacity Investment and Allocation

Ahn,

Çetinkaya,

Duenyas

et al. 2024

Production and Operations Management

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“…Option contract theory is an important theory used in this study to address the coordination of government-enterprise cooperation interests. In drug stockpile management, a double marginal utility is caused by the inconsistency between the maximization of the respective interests pursued by the government and enterprises in the coordination of interests in the supply chain and the goal of maximizing the interests of collation [ 33 , 34 ]. Options contracts, as an incentive mechanism for aligning supply chain interests, are frequently used in supply chain management.…”

Section: Literature Review and Theoretical Foundationsmentioning

confidence: 99%

“…The government-enterprise agreement is single-cycle, the contract length is equal to the shelf life of drugs, and when the reserve materials exceed the shelf life will be residual value treatment [ 32 , 33 , 54 ];…”

Section: Problem Description and Assumptionsmentioning

confidence: 99%

“…Based on the elements considered in this study, and some of the references modeling process, we constructed the model for this study [ 32 , 33 , 83 , 84 ]. The government’s separate stockpile of drugs in shortage is a government-managed stockpile, which means that before a drug shortage occurs, the government purchases a determined amount of drugs from pharmaceutical enterprises as a conventional stockpile at an initial purchase price, by the population of the region, historical monitoring data on drugs in shortage, and financial factors ( Q a ).…”

Section: The Benchmark Modelmentioning

confidence: 99%

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Coping with drug shortages: A study of government-enterprise option cooperation stockpiling strategies for drugs in shortage considering API surrogate stockpiling subsidies

Lan,

Meng,

Sun

et al. 2024

PLoS ONE

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Drug shortage is a global problem, and the development of government-enterprise cooperative stockpiles of drugs in shortage, combining physical and production capacity, has become one of the most important means of coping with drug shortages. However, existing studies have tended to overlook the fact that shortages of Active Pharmaceutical Ingredients (APIs) have become an important constraint on production capacity stockpiling and that the lack of incentives and provisions for coordination of benefits have led to a double marginal effect of joint stockpiling by government and enterprises of drugs in shortage. Accordingly, this study introduced the option contract to the drug supply system composed of government and pharmaceutical enterprises and used the subsidy of API storage in lieu as an important initiative to incentivize the reserve of APIs, to construct a model of shortage drug reserve under the government’s leadership. This study aims to improve the effect of government-enterprise joint stockpiling of drugs in shortage, which is of great theoretical and practical significance. According to the classification of production license types of pharmaceutical enterprises, this study established a three-level supply chain decentralized decision-making model consisting of the government, formulation enterprises, and API enterprises, and a two-level supply chain centralized decision-making model consisting of the government and API Formulation (API-F) integrated enterprises, respectively. By solving the inverse order derivation, the government-enterprise option cooperation conditions and optimal decision-making strategy were derived. The study results showed that: (i) The addition of enterprise API stockpiling mode can help the government conventional reserves, and enterprise production capacity reserves, broaden the way of drug reserves, and improve the effect of government-enterprise option cooperation; (ii) when the probability of drug shortages is high, the government should prefer the cooperation of API-F integrated enterprises, which is conducive to reducing intermediate links and government costs and improving the supply responsiveness to shortages of medicines; (iii) Setting appropriate government subsidies for API storage can incentivize enterprises to stockpile APIs and improve drug production capacity and physical supply response capability. This study took the problem of socialized stockpiling of drugs in shortage as an entry point and explored the problems and solution strategies in the government-enterprise cooperative stockpiling of drugs in shortage, which not only made some theoretical contributions to the application of options contract in the government-enterprise cooperative stockpiling of drugs in shortage but also provided new ideas and theoretical basis for the improvement of the stockpiling work of drugs in shortage.

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A capacity reservation game for suppliers with multiple blocks of capacity

Shao

2022

Operations Research Letters

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Should suppliers allow capacity transfers?

Cited by 4 publications

References 29 publications

Benefits of Collaboration on Capacity Investment and Allocation

Benefits of Collaboration on Capacity Investment and Allocation

Coping with drug shortages: A study of government-enterprise option cooperation stockpiling strategies for drugs in shortage considering API surrogate stockpiling subsidies

A capacity reservation game for suppliers with multiple blocks of capacity

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