System dynamics modeling of the earthquake-induced interruption of a business

Abstract

ABSTRACT This study proposes a system dynamics simulation model that characterizes the dynamics post-earthquake performance of a business considering its dependency on lifelines (i.e., utilities and road networks) and the state of the market. The model characterizes the relationships between the business’s profitability and the resources it needs to operate (e.g., staff, raw materials, and equipment). It also considers the supply and demand dynamics that govern the prices of goods or services the business produces. It can be used to holistically investigate a business’s post-earthquake performance and recovery. It helps administrators acquire an insight into how to reduce the vulnerability of their businesses against probable future earthquakes. The model application is showcased by applying it to simulate the post-earthquake performance and recovery of a manufacturing business. The results indicate that, unlike retrofits, post-earthquake measures like increasing prices or changing shipping policies do not adequately mitigate earthquake-induced business losses.