Integrated Virtual Stockpile Pooling and On-Event Retrieval for Efficient Emergency Response

Abstract

To mitigate warehousing and spoilage costs in emergency supply stockpiling, governments often partner with private companies to distribute emergency supplies across various locations in the commercial supply chain for regular demand rotation. Commonly, a ``red line" is assigned to each location, with inventory below this line reserved solely for emergencies. Previous literature has proposed a Virtual Stockpile Pooling (VSP) strategy that dynamically adjusts red lines among the locations based on real-time demand information, omitting the emergency retrieval process. This study introduces an Integrated Virtual Stockpile Pooling and On-Event Retrieval (VSPR) strategy that refines VSP by incorporating emergency retrieval costs into its design. We present a novel ranking method to solve VSPR's three-stage optimization process, leading to a collaborative base-stock system, a priority-based red-line reassignment, and a greedy algorithm for efficient supply retrieval. We show that VSPR strategically reserves supplies at ``key locations", optimizing cost and response efficiency. A case study demonstrates that, compared with VSP, VSPR has the potential to reduce operational costs by up to 13.8\% while enhancing service levels by up to 4.9\%. VSPR’s applicability extends to many other contexts, including resilient supply chain management, healthcare operations, energy and natural resource management, and military logistics.

Keywords: multi-location inventory model, emergency supplies, inventory pooling, on-event retrieval, key locations