Pre-Positioning Relief Supplies and Supplier Selection Strategy in Disaster Relief
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Natural disasters have a life changing impact on individuals, the effect can be felt at various levels and can even affect an entire country. In the United States, major disasters have seriously affected the country’s economy and the people. It has been also challenging the country’s emergency response capacity. In order to reduce the damage caused by disasters, there is a need for the proper planning and efficient management of emergency supplies in place before the onset of a disaster.
This research focuses on the preparedness stage of disaster operations management, precisely on how the relief organization can best satisfy demand at minimum costs and risk. Currently in the United States, the system in place plans for the procurement of emergency supplies which are stored in a warehouse. However, the major challenge faced by relief organizations (e.g. Federal Emergency Management Agency) is the timely delivery of the relief items at a reasonable cost, while dealing with uncertainties of disasters.
This research addresses the problems encountered by the relief organization by concentrating on two aspects. Firstly, the commodity lifetime period is considered with the related costs associated with the storage and removal (when it is close to expiration) of relief items. This study provides relief agencies managerial insights about dynamic control of inventory over each scenario and dealing with relief supplies which will expire. Secondly, the decision on supplier selection is integrated into the pre-positioning stage for the efficient management of the relief supplies and timely distribution of the supplies to the disaster victims. Agreement terms such as the commitment quantity of the relief organization, the reserve capacity of the suppliers, and the quantity discount rate are considered. This study gives the relief agencies insights on how the agreement terms affect the supplier selection decision, and how the total expected costs of having an agreement in place and procuring relief items from the suppliers can be minimized. Compared to the traditional two-stage stochastic programming approach, which is commonly used in the field of humanitarian relief, a multi-stage stochastic programming model is presented in each part because of the stochastic nature of the proposed problems, and the need to make sequential decisions over time.
In this research, a real-world setting which considers disasters such as earthquakes, floods and hurricanes in the mainland of the United States is used as a case study. The sensitivities of the models for variation of parameters are also studied. The first part of this research provides insight on how costs can be minimized when the relief organization finds a better way of disposing relief items close to expiration. The second part provides relief organization insights on how the costs involved in the supplier selection can be managed and the type of suppliers to be in agreement with.