Abstract
Service outsourcing is very common in a commercial supply chain, and in humanitarian relief area, the transportation service is usually outsourced. To practice relief supply more effectively, it seems essential to enlarge outsourcing from shipping to more areas, and private enterprises could play a vital role. This paper examines the optimal pre-disaster order quantity of a certain relief commodity, based on a two-stage coordinated approach. Our findings show that the delay cost, shortage penalty cost, risk of supply shortage, salvage value, expected perishable rate, unit inventory cost and reactive price have significant impacts on the optimal amount of propositioned inventory. Moreover, the outsourcing strategies differ by types of relief commodities. For perishable supplies, proactive or reactive outsourcing would improve the benefits of buyer and supplier simultaneously. As for imperishable supplies, it is better to combine proactive insourcing approach and reactive outsourcing strategy. In view of some supplies whose monitoring cost is high, the insourcing approach is much better than the outsourcing approach.
Highlights
Disasters, natural or man-made, have occurred more frequently in recent years, as well as the casualties (Nagurney et al 2011; Day 2014)
More than 200 million people are affected by natural disasters annually (Duran et al 2011) and survival of the victims relies much on the humanitarian assistance provided by government or not-for-profit organizations (NPOs), such as Federal Emergency Management Agency (FEMA) and the Red Cross (Kunz et al 2014)
Governments and NPOs are well experienced in humanitarian relief rather than logistic management while large retailers are good at dealing with daily logistics problems
Summary
Natural or man-made, have occurred more frequently in recent years, as well as the casualties (Nagurney et al 2011; Day 2014). Proactive decisions provide certain protections before a disaster occurs and reactive approach mainly focuses on adjusting supply chain processes in the presence of unexpected events (Ivanov et al 2016; Dolgui et al 2017). Governments and NPOs are well experienced in humanitarian relief rather than logistic management while large retailers are good at dealing with daily logistics problems. This paper tries to solve this problem by introducing outsourcing into relief material supply chain. To enlarge outsourcing from shipping to more areas may contribute to more efficient relief material management, and private enterprises should play a vital role (Wang et al 2016). We analyze the optimal pre-disaster inventory of certain relief commodities and compare the social efficiency between the insourcing and outsourcing approaches.
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