What is it about?
In this paper we establish the optimal procurement policy for a product while facing uncertain demand and an uncertain funding schedule - a situation that is common to many humanitarian and other non-profit settings. We show that it is optimal for a manager to ignore funding uncertainties during planning and only take them into consideration during execution. We also quantify the benefits of front loaded funding.
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Why is it important?
This is the first paper to study both demand and funding uncertainties and establish the optimal procurement policy in humanitarian operations. The simplicity of the optimal policy makes it easier to implement in real settings. The computational work in this paper provides insights into the benefits of front loaded funding under various operating conditions
Perspectives
This research was motivated by my earlier work with UNICEF on revamping the Plumpy Nut (RUTF) supply chain into the Horn of Africa. That project brought me face to face with ground reality around funding uncertainties and their negative impact on the efficacy of life saving interventions. The drive to create a simple yet powerful procurement policy motivated this work with a doctoral student.
JAYASHANKAR Swaminathan
American Diplomacy Publishers
Read the Original
This page is a summary of: Inventory Management in Humanitarian Operations: Impact of Amount, Schedule, and Uncertainty in Funding, Manufacturing & Service Operations Management, October 2014, INFORMS,
DOI: 10.1287/msom.2014.0497.
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