Pre-positioning and procurement strategy for relief supplies with the critical raw material participation

Abstract

The supply disruption of the critical raw material and the manufacturer’s pre-disaster insufficient relief supply reserves significantly affect the relief supply chain system. To solve this dilemma, we divide the demand for relief supplies into critical and non-critical periods according to relief time and urgency requirements, and propose the manufacturer’s physical reserve and production capacity reserve strategies for relief supplies. Then we develop the Benchmark model with only a single physical reserve strategy. In particular, a Dual reserve model and a Three-tier relief supply chain model are developed, and the optimal decisions for the government and the agreement enterprises are obtained. Through a comparative analysis between the Dual reserve model and the Benchmark model, the manufacturer tends to adopt a dual reserve strategy with both real products and production capacity as it can strengthen the government’s capacity for emergency response and support while diminishing the manufacturer’s inventory risk. And the Three-tier relief supply chain model with the participation of the critical raw material supplier proves to be better than the Dual reserve model since it reduces the overall cost of the supply chain and guarantees the source of critical raw materials for post-disaster relief supply production.