Abstract
The turn-and-earn allocation method which is commonly used in the automobile industry is analyzed. It is demonstrated that turn-and-earn induces the retailers to increase their sales when demand is low and the supplier's capacity is otherwise underutilized. This in turn increases supplier profits. The method is best characterized as a means for the supplier to increase profits at the expense of the retailers and potentially even the supply chain.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 685-703 |
| Number of pages | 19 |
| Journal | Management Science |
| Volume | 45 |
| Issue number | 5 |
| DOIs | |
| State | Published - May 1999 |
ASJC Scopus subject areas
- Strategy and Management
- Management Science and Operations Research
Fingerprint Dive into the research topics of 'Capacity allocation using past sales: when to turn-and-earn'. Together they form a unique fingerprint.
Cite this
Cachon, G. P., & Lariviere, M. A. (1999). Capacity allocation using past sales: when to turn-and-earn. Management Science, 45(5), 685-703. https://doi.org/10.1287/mnsc.45.5.685