A contingent plan for disaster response
Natural and man-made disasters imply a great deal of uncertainty in terms of potential damage, though it is certain that there would be a huge spike in the demand for relief supplies causing shortages and/or delays in providing aid. Ruptures in the infrastructure (roads, utility, and communication lines) cause additional delays due to repairs. Therefore, the relief providers need to work in collaboration with retailers, and infrastructure service providers for improving responsiveness. The relief providers (government and non government) rely on acquiring and delivering supplies in real time because such actions accompany little risk of resource underutilization, though the cost of real time acquisitions can be high. In contrast, a proactive response, while minimizing acquisition cost, can be very ineffective if demand surges are high. We study a hybrid of reactive and proactive approaches, where the reactive response is contingent upon the disaster intensity exceeding a certain threshold. We show how the threshold value may impact capacity acquisitions and prices and establish the optimality of contingent response. Further, we establish how an infrastructure contract may help reducing the social cost of disaster.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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.
- Wu, Desheng & Olson, David L., 2008. "Supply chain risk, simulation, and vendor selection," International Journal of Production Economics, Elsevier, vol. 114(2), pages 646-655, August.
- Tatham, Peter & Kovács, Gyöngyi, 2010. "The application of "swift trust" to humanitarian logistics," International Journal of Production Economics, Elsevier, vol. 126(1), pages 35-45, July.
- Brian Tomlin, 2006. "On the Value of Mitigation and Contingency Strategies for Managing Supply Chain Disruption Risks," Management Science, INFORMS, vol. 52(5), pages 639-657, May.
- Qi, Xiangtong & Bard, Jonathan F. & Yu, Gang, 2004. "Supply chain coordination with demand disruptions," Omega, Elsevier, vol. 32(4), pages 301-312, August.
- Mete, Huseyin Onur & Zabinsky, Zelda B., 2010. "Stochastic optimization of medical supply location and distribution in disaster management," International Journal of Production Economics, Elsevier, vol. 126(1), pages 76-84, July.
- Dowty, Rachel A. & Wallace, William A., 2010. "Implications of organizational culture for supply chain disruption and restoration," International Journal of Production Economics, Elsevier, vol. 126(1), pages 57-65, July.
- M. Ruth & K. Donaghy & P. Kirshen, 2006. "Introduction," Chapters, in: Regional Climate Change and Variability, chapter 1 Edward Elgar.
When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:134:y:2011:i:1:p:3-15. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If references are entirely missing, you can add them using this form.