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Preparedness with a System Integrating Inventory, Capacity, and Capability for Future Pandemics and Other Disasters

Musen, L., Sodhi, M. ORCID: 0000-0002-2031-4387, Tang, C.S. & Yu, J. (2022). Preparedness with a System Integrating Inventory, Capacity, and Capability for Future Pandemics and Other Disasters. Production and Operations Management,

Abstract

The chaotic response of the US Strategic National Stockpile to COVID-19 during 2020 highlighted the inadequacy of the inventory-based approaches to disaster response. This paper examines the integration of stockpile inventory, backup capacity, and standby capability to meet the disaster-related surge in demand in the future. We present a two-period model of such an integrated system for consumable items with uncertain demand that follows a general probability distribution. Our model incorporates standby capability in period 1 that can be converted to additional capacity for use in period 2, with the conversion yield being deterministic or stochastic. Our main results are: (1) Adding capacity in addition to inventory is beneficial only when the capacity reservation-related costs are relatively lower than the inventory-related costs. In this case, adding capacity will decrease the inventory needed in both periods, the shortfall probability, and the total expected cost. (2) Adding capability in period 1 is cost-effective only when the ratio of capability-development cost to conversion yield is lower than the capacity reservation cost. In this case, investing in capability results in less inventory and less reserved capacity in period 2. (3) Higher uncertainty in capability conversion yield reduces the attraction of developing capability in period 1. Consequently, less capability would be developed in period 1, while more inventory and capacity would be needed in period 2 in the face of a higher shortfall probability.

Publication Type: Article
Additional Information: This is the peer reviewed version of the following article: Musen, L., Sodhi, M. , Tang, C.S. view all authors (2022). Preparedness with a System Integrating Inventory, Capacity, and Capability for Future Pandemics and Other Disasters. Production and Operations Management, which is to be published in final form at https://onlinelibrary.wiley.com/journal/19375956. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. This article may not be enhanced, enriched or otherwise transformed into a derivative work, without express permission from Wiley or by statutory rights under applicable legislation. Copyright notices must not be removed, obscured or modified. The article must be linked to Wiley’s version of record on Wiley Online Library and any embedding, framing or otherwise making available the article or pages thereof by third parties from platforms, services and websites other than Wiley Online Library must be prohibited.
Publisher Keywords: Pandemic and disaster response, stockpile inventory, backup capacity, standby capability
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
H Social Sciences > HN Social history and conditions. Social problems. Social reform
Q Science > QR Microbiology > QR180 Immunology
R Medicine > RA Public aspects of medicine > RA0421 Public health. Hygiene. Preventive Medicine
Departments: Bayes Business School > Management
[img] Text - Accepted Version
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