Government decisions for relief materials reserve under supply uncertainty within government-enterprise agreement
Résumé
Pre-positioned inventory of relief materials is crucial for the rapid response to potential disasters. Storing relief materials near disaster-prone areas facilitates quick delivery after a disaster. Consequently, governments often collaborate with local enterprises and stores to store materials. However, the proximity to disaster sites can result in the damage of relief materials, exacerbating shortages, particularly during major disasters. Despite this, the literature has not thoroughly addressed how governments pre-position materials considering damage risk. Therefore, this paper constructs a model for the relief supply chains, including a local government, a local supplier and a non-local supplier to determine the government's optimal reserve strategy and quantity. The demand and damage to materials depend on disaster intensity. We derive the conditions under which a specific reserve strategy (no-external reserve, local reserve, non-local reserve, bi-site reserve) is optimal and corresponding reserve quantity. The impacts of supplier characteristics, government-owned reserves, emergency procurement price, disaster intensity distribution, demand-intensity and supply-intensity relationships on optimal prepositioned reserves are identified. Several management insights are drawn from extensive numerical experiments.