Production and Reserve Strategies of Relief Materials Based on Post-Disaster Spot Market

The government’s proactive deployment of emergency stocks is vital for disaster management. However, in the aftermath of a disaster, if reserves are depleted, government may request manufacturers to produce emergency supplies or purchase from the spot market. This situation presents challenges such as whether manufacturers can make emergency production? What is the situation in the spot market? To address these challenges, we develop two relief supply chain models involving government and manufacturer: one with emergency production capacity (E-SC) and one without (N-SC). The government can either purchase emergency supplies from manufacturer at wholesale prices and reserve independently or enter into option contract with manufacturer to jointly store supplies. Additionally, we incorporate random spot market prices and difficulty coefficients for spot market purchases. By establishing and solving the revenue models for both model, we analyze the optimal strategies for government and manufacturer. We further explore how fluctuation in spot price, procurement difficulty, and inventory cost impact optimal decisions and expected returns through mathematical analysis and numerical simulation. This approach provides valuable insights for government and manufacturers to enhance their disaster relief efforts and improve their response to challenges in managing relief materials.