Materials procurement and reserves policies for humanitarian logistics with recycling and replenishment mechanisms

Abstract

Abstract Physical reserves, being one of the most important resources in humanitarian rescue operations, should ideally be in adequate quantity and in good quality to meet sudden-onset demands. However, given the uncertainties in demand quantity and timing, reserves (i.e., medicines, drugs, compressed food) can expire if they are not used in a timely manner, resulting in a huge wastage or the expired reserves being consumed. Considering factors of uncertain demand, resource wastage and cost efficiency together, this paper focuses on procurement and reserves cooperation between a given government authority and a strategic supplier in a framework of quantity commitment contract. Under some plausible assumptions, the optimal recycling and replenishment policies, and the government’s optimal payment strategies are formulated. Through a numerical example and sensitivity analyses, the practical applicability of the proposed model to the procurement and reserves management for humanitarian logistics, underlining managerial insights, is examined. Specially, this paper suggests that the government should actively cooperate with suppliers to co-reserve perishable or consumable materials, and give priority to suppliers whose operational costs are low and market shares are big. Moreover, factors, including materials’ shelf-life, customers’ perception and consumption rate, etc., should be carefully evaluated when the government selects perishable materials as reserves and corresponding suppliers as partners.