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Article

Optimization of Capacity Allocation Models with Effort Dependent Demand in Global Supply Chain

College of Business Administration, Hongik University, Seoul 04066, Korea
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Academic Editors: Donghyun Choi, Bomi Song and Jinsung Rha
Sustainability 2022, 14(3), 1375; https://doi.org/10.3390/su14031375
Received: 29 December 2021 / Revised: 22 January 2022 / Accepted: 24 January 2022 / Published: 25 January 2022
(This article belongs to the Special Issue Sustainable Supply Chain and Logistics through Smart Technology)
In a demand driven market, optimal allocation of capacity to the demand has been one of the major issues. In this paper, we consider a single global freight firm allocating its capacity to its own regional sales offices. The firm sells cargo space based on two types of contracts: long-term and spot sales. Regional sales offices utilize their effort to generate more demand in their designated region. In other words, it is assumed that the demand is dependent on their efforts. First, we find a closed-form solution for the optimal level of the efforts of a single sales office in a specific region. Then, we study the case when the firm allocates its limited total capacity to two sales offices. We investigate different methods of capacity allocation: decentralization, centralization, and mixed, by conducting numerical studies. Different from the traditional finding, we suggest that the decentralization method is not always dominated by the centralization method. View Full-Text
Keywords: capacity allocation; global supply chain; revenue management; logistics; decentralization; centralization capacity allocation; global supply chain; revenue management; logistics; decentralization; centralization
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MDPI and ACS Style

Kim, S.; Chung, K. Optimization of Capacity Allocation Models with Effort Dependent Demand in Global Supply Chain. Sustainability 2022, 14, 1375. https://doi.org/10.3390/su14031375

AMA Style

Kim S, Chung K. Optimization of Capacity Allocation Models with Effort Dependent Demand in Global Supply Chain. Sustainability. 2022; 14(3):1375. https://doi.org/10.3390/su14031375

Chicago/Turabian Style

Kim, Seungbeom, and Kwanghun Chung. 2022. "Optimization of Capacity Allocation Models with Effort Dependent Demand in Global Supply Chain" Sustainability 14, no. 3: 1375. https://doi.org/10.3390/su14031375

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