IDEAS home Printed from https://ideas.repec.org/a/eee/ejores/v304y2023i1p183-191.html
   My bibliography  Save this article

Optimal stock and capital reserve policies for emergency medical supplies against epidemic outbreaks

Author

Listed:
  • Zhang, Weijian
  • Shi, Xianliang
  • Huang, Anqiang
  • Hua, Guowei
  • Teunter, Ruud H.

Abstract

Killing tens of thousand of people and bringing tremendous loss, epidemics have been one of the most huge and urgent threats for all human kind. Given the abruptness of epidemic outbreaks, quick access to sufficient medical supplies is essential. Most existing research focuses on reserving physical stocks only, while some authors also consider reserving production capacity. This study is the first to consider capital reserves besides physical stocks, a practice that is for instance used in China. We characterize in closed form and graphically under what conditions a certain reserve policy (no reserves, safety stock only, capital reserve only, mixed reserves) is optimal. A key insight is that increased demand uncertainty sometimes leads to lower safety stock levels, although the combined reserves do increase. In such situations, to limit the risk of obsolescence, it is optimal to rely less on safety stocks and more on capital reserves.

Suggested Citation

  • Zhang, Weijian & Shi, Xianliang & Huang, Anqiang & Hua, Guowei & Teunter, Ruud H., 2023. "Optimal stock and capital reserve policies for emergency medical supplies against epidemic outbreaks," European Journal of Operational Research, Elsevier, vol. 304(1), pages 183-191.
    • Handle: RePEc:eee:ejores:v:304:y:2023:i:1:p:183-191
    DOI: 10.1016/j.ejor.2021.06.026
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0377221721005415
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ejor.2021.06.026?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Florian Lücker & Ralf W. Seifert & Işık Biçer, 2019. "Roles of inventory and reserve capacity in mitigating supply chain disruption risk," International Journal of Production Research, Taylor & Francis Journals, vol. 57(4), pages 1238-1249, February.
    2. Harrington Jr., Joseph E. & Hsu, Edbert B., 2010. "Stockpiling anti-viral drugs for a pandemic: The role of Manufacturer Reserve Programs," Journal of Health Economics, Elsevier, vol. 29(3), pages 438-444, May.
    3. Reimann, Marc, 2011. "Speculative production and anticipative reservation of reactive capacity by a multi-product newsvendor," European Journal of Operational Research, Elsevier, vol. 211(1), pages 35-46, May.
    4. Rawls, Carmen G. & Turnquist, Mark A., 2010. "Pre-positioning of emergency supplies for disaster response," Transportation Research Part B: Methodological, Elsevier, vol. 44(4), pages 521-534, May.
    5. Cattani, Kyle D. & Dahan, Ely & Schmidt, Glen M., 2008. "Tailored capacity: Speculative and reactive fabrication of fashion goods," International Journal of Production Economics, Elsevier, vol. 114(2), pages 416-430, August.
    6. Elodie Adida & Po-Ching DeLaurentis & Mark Lawley, 2011. "Hospital stockpiling for disaster planning," IISE Transactions, Taylor & Francis Journals, vol. 43(5), pages 348-362.
    7. Clay Whybark, D., 2007. "Issues in managing disaster relief inventories," International Journal of Production Economics, Elsevier, vol. 108(1-2), pages 228-235, July.
    8. Zhou, Quan Spring & Olsen, Tava Lennon, 2018. "Rotating the medical supplies for emergency response: A simulation based approach," International Journal of Production Economics, Elsevier, vol. 196(C), pages 1-11.
    9. Chang, Mei-Shiang & Tseng, Ya-Ling & Chen, Jing-Wen, 2007. "A scenario planning approach for the flood emergency logistics preparation problem under uncertainty," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 43(6), pages 737-754, November.
    10. Jingxian Chen & Liang Liang & Dong-Qing Yao, 2017. "Pre-positioning of relief inventories for non-profit organizations: a newsvendor approach," Annals of Operations Research, Springer, vol. 259(1), pages 35-63, December.
    11. Karthik V. Natarajan & Jayashankar M. Swaminathan, 2014. "Inventory Management in Humanitarian Operations: Impact of Amount, Schedule, and Uncertainty in Funding," Manufacturing & Service Operations Management, INFORMS, vol. 16(4), pages 595-603, October.
    12. Lu Huang & Jing-Sheng Song & Jordan Tong, 2016. "Supply Chain Planning for Random Demand Surges: Reactive Capacity and Safety Stock," Manufacturing & Service Operations Management, INFORMS, vol. 18(4), pages 509-524, October.
    13. Rottkemper, Beate & Fischer, Kathrin & Blecken, Alexander, 2012. "A transshipment model for distribution and inventory relocation under uncertainty in humanitarian operations," Socio-Economic Planning Sciences, Elsevier, vol. 46(1), pages 98-109.
    14. Zhou, Quan Spring & Olsen, Tava Lennon, 2017. "Inventory rotation of medical supplies for emergency response," European Journal of Operational Research, Elsevier, vol. 257(3), pages 810-821.
    15. Wang, Xiaolong & Liu, Liwen, 2007. "Coordination in a retailer-led supply chain through option contract," International Journal of Production Economics, Elsevier, vol. 110(1-2), pages 115-127, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yao, Chen & Fan, Bo & Zhao, Yupan & Cheng, Xinyue, 2023. "Evolutionary dynamics of supervision-compliance game on optimal pre-positioning strategies in relief supply chain management," Socio-Economic Planning Sciences, Elsevier, vol. 87(PB).
    2. Mashud, Abu Hashan Md & Chakrabortty, Ripon K. & Hussain, Omar K. & Choi, Tsan-Ming, 2024. "Reducing emissions from production and distribution in three-echelon supply chains," International Journal of Production Economics, Elsevier, vol. 271(C).
    3. Xinshang You & Shuo Zhao & Yanbo Yang & Dongli Zhang, 2022. "Influence of the Government Department on the Production Capacity Reserve of Emergency Enterprises Based on Multi-Scenario Evolutionary Game," Sustainability, MDPI, vol. 14(23), pages 1-35, November.
    4. Jiang, Jiehui & Ma, Jie & Chen, Xiaojing, 2024. "Multi-regional collaborative mechanisms in emergency resource reserve and pre-dispatch design," International Journal of Production Economics, Elsevier, vol. 270(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Abhishek Behl & Pankaj Dutta, 2019. "Humanitarian supply chain management: a thematic literature review and future directions of research," Annals of Operations Research, Springer, vol. 283(1), pages 1001-1044, December.
    2. Chenxing Li & Xianliang Shi, 2024. "Supply Strategies and Business Model Options for Online Retailers of Agricultural Products," Sustainability, MDPI, vol. 16(20), pages 1-21, October.
    3. Yusen Ye & Wen Jiao & Hong Yan, 2020. "Managing Relief Inventories Responding to Natural Disasters: Gaps Between Practice and Literature," Production and Operations Management, Production and Operations Management Society, vol. 29(4), pages 807-832, April.
    4. Yao, Chen & Fan, Bo & Zhao, Yupan & Cheng, Xinyue, 2023. "Evolutionary dynamics of supervision-compliance game on optimal pre-positioning strategies in relief supply chain management," Socio-Economic Planning Sciences, Elsevier, vol. 87(PB).
    5. Baruch Keren, 2023. "Prepositioning Emergency Inventories Under Uncertainties of Time, Location, and Quantity," SN Operations Research Forum, Springer, vol. 4(2), pages 1-25, June.
    6. Paul, Jomon Aliyas & Wang, Xinfang (Jocelyn), 2015. "Robust optimization for United States Department of Agriculture food aid bid allocations," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 82(C), pages 129-146.
    7. A. Anaya-Arenas & J. Renaud & A. Ruiz, 2014. "Relief distribution networks: a systematic review," Annals of Operations Research, Springer, vol. 223(1), pages 53-79, December.
    8. Alem, Douglas & Clark, Alistair & Moreno, Alfredo, 2016. "Stochastic network models for logistics planning in disaster relief," European Journal of Operational Research, Elsevier, vol. 255(1), pages 187-206.
    9. Ubaid Illahi & Mohammad Shafi Mir, 2021. "Maintaining efficient logistics and supply chain management operations during and after coronavirus (COVID-19) pandemic: learning from the past experiences," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(8), pages 11157-11178, August.
    10. Sabbaghtorkan, Monir & Batta, Rajan & He, Qing, 2020. "Prepositioning of assets and supplies in disaster operations management: Review and research gap identification," European Journal of Operational Research, Elsevier, vol. 284(1), pages 1-19.
    11. Jianliang Yang & Hanping Hou & Yingjie Ju & Shiling Gu & Zeqiang Qian & Xuan Wang, 2020. "The Mechanism of Distribution Effectiveness of Territory Emergency Public Storage Materials," Sustainability, MDPI, vol. 12(21), pages 1-14, October.
    12. Rivera-Royero, Daniel & Galindo, Gina & Yie-Pinedo, Ruben, 2020. "Planning the delivery of relief supplies upon the occurrence of a natural disaster while considering the assembly process of the relief kits," Socio-Economic Planning Sciences, Elsevier, vol. 69(C).
    13. Hanane Allioui & Azzeddine Allioui & Youssef Mourdi, 2024. "Maintaining effective logistics management during and after COVID‑19 pandemic: survey on the importance of artificial intelligence to enhance recovery strategies," OPSEARCH, Springer;Operational Research Society of India, vol. 61(2), pages 918-962, June.
    14. Wang, Yusheng & Dong, Zhijie Sasha & Hu, Shaolong, 2021. "A stochastic prepositioning model for distribution of disaster supplies considering lateral transshipment," Socio-Economic Planning Sciences, Elsevier, vol. 74(C).
    15. Mofidi, Seyed Shahab & Pazour, Jennifer A. & Roy, Debjit, 2018. "Proactive vs. reactive order-fulfillment resource allocation for sea-based logistics," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 114(C), pages 66-84.
    16. Kılcı, Fırat & Kara, Bahar Yetiş & Bozkaya, Burçin, 2015. "Locating temporary shelter areas after an earthquake: A case for Turkey," European Journal of Operational Research, Elsevier, vol. 243(1), pages 323-332.
    17. Chakravarty, Amiya K., 2014. "Humanitarian relief chain: Rapid response under uncertainty," International Journal of Production Economics, Elsevier, vol. 151(C), pages 146-157.
    18. Roni, Mohammad S. & Jin, Mingzhou & Eksioglu, Sandra D., 2015. "A hybrid inventory management system responding to regular demand and surge demand," Omega, Elsevier, vol. 52(C), pages 190-200.
    19. Sheu, Jiuh-Biing & Pan, Cheng, 2014. "A method for designing centralized emergency supply network to respond to large-scale natural disasters," Transportation Research Part B: Methodological, Elsevier, vol. 67(C), pages 284-305.
    20. Zhou, Quan Spring & Olsen, Tava Lennon, 2018. "Rotating the medical supplies for emergency response: A simulation based approach," International Journal of Production Economics, Elsevier, vol. 196(C), pages 1-11.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ejores:v:304:y:2023:i:1:p:183-191. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eor .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.