Disaster Relief Inventory Management: Horizontal Cooperation between Humanitarian Organizations

Abstract

Cooperation among humanitarian organizations has attracted increasing attention to enhance effectiveness and efficiency of relief supply chains. Our research focuses on horizontal cooperation in inventory management which is currently implemented in the United Nations Humanitarian Response Depot (UNHRD) network. The present work follows a two‐step research approach, which involves collection of empirical data and quantitative modeling to examine and overcome the coordination challenges of the network. Our interviews with members of the network identified several managerial issues for sustainable cooperative inventory management that the UNHRD network pursues. Using a newsvendor model in the context of non‐cooperative game theory, our research has explored member humanitarian organizations' incentive of joining the network, a coordination mechanism which achieves system optimality, and impacts of members' decisions about stock rationing. Our results indicate that behaviors of member HOs do not necessarily align with the UNHRD's expectation. Our results suggest that for system optimality, a system coordinator should carefully assess the circumstances, including demand coefficient and stock rationing. Our research also proposes a policy priority for the first‐best system optimal inventory management.