Inventory Policies for Disaster Relief Operations : A Mix of Reactive and Proactive Alternatives

The aftermath of a rapid-onset disaster is the most crucial period, during which health and humanitarian organizations (HOs) must distribute critical relief items at quickest possible time. Yet, supply management is a significant challenge due to many unknowns such as time, place, type, and magnitude of disasters. Taking supply, demand, and budget uncertainty, we propose an inventory policy for a single-relief item, and extend it to multiple-relief items. We combine two common alternatives — {proactive} and {reactive} — and analyze policies that minimize expected costs under a budget constraint and budget uncertainty. Our analyses illustrate that: (i) finding an optimal level of pre-positioning inventory is more complex when the landed cost of pre-positioned item is less than purchasing relief item aftermath of a disaster; (ii) budget limitation is the underlying source of complexity to determine optimal inventory level; (iii) pre-disaster investment saves more compared to emergency funding, and (iv) the kitting of multiple relief items is not supported unless the criticality level, demand and supply characteristics of all items in the kit are homogeneous