|Original language||English (US)|
|Title of host publication||Wiley Encyclopedia of Operations Research and Management Science|
|Editors||James J. Cochran|
|Publisher||John Wiley & Sons, Inc.|
|State||Published - 2010|
A capacity allocation mechanism allows a supplier to apportion output among downstream buyers when submitted orders exceed available capacity. Some buyers will not receive their full request. How the allocation mechanism determines who is shorted and the extent of the shortfall affects how buyers order. Consequently, the allocation mechanism can have a significant impact on supply-chain performance. In this article, we first discuss the role allocation mechanisms have had in practice and then review academic research on allocation mechanisms. We consider both, single-period models in which today's orders determine today's allocations as well as multiperiod models in which today's sales determine tomorrow's allocations.