Essays on material flow management during disasters : material convergence and panic buying

• Main Author: Martin, J. Lemuel
• Other Authors: Geoffrey Chua
• Format: Thesis-Doctor of Philosophy
• Language: English
• Published: Nanyang Technological University 2021
• Subjects: Business::Operations management
• Online Access: https://hdl.handle.net/10356/151731
• Institution: Nanyang Technological University

During disasters, the complexity of material flow management can overwhelm unprepared entities, from retailers to relief providers. This dissertation focuses on two disaster-related material flow phenomena with prominent behavioral components: material convergence and panic buying. A common problem in disaster response is the management of material flowing into the disaster area, known as material convergence, wherein most arriving supply is unneeded. In Chapter 2, we construct a model for material convergence wherein a relief provider with limited storage and manpower capacity at an end site warehouse faces both stochastic demand and supply, with only a portion of arriving supply being useful while the rest is unneeded for the relief effort. We quantify when material convergence occurs and propose a backlog-minimizing manpower allocation where as much demand as possible is satisfied first and any remaining manpower is dedicated to disposal. We show that this policy is optimal in a deterministic setting and discuss other policies outside of manpower capacity allocation that are claimed to mitigate material convergence. We find that policies that address the NP ratio, the proportion of supply that is unneeded, are most effective in addressing material convergence. Lastly, we use numerical simulations to show that our proposed policy achieves near-optimal results in the stochastic setting, and find a simple ``rule of thumb'' policy that can achieve similar results under typical post-disaster scenarios. Panic buying occurs when strategic customers anticipate potential supply disruptions due to disasters and buy more than the usual amount purchased, leading to a self-fulfilling prophecy of retailer stockouts as the behavior spreads across customers. In Chapter 3, we argue that panic buying is a rational response by the customer based on limited available information, as opposed to an ``irrational response'' as has been portrayed in popular media. We propose key properties for a rational model of panic buying and rational retailer response. We construct a model that satisfies these properties and discuss the negative effects of panic buying, particularly on the retailer, and examine several interventions to mitigate the negative effects of panic buying. We find that our results are consistent with industry practices, suggesting that our model can be used for future modeling and planning purposes. Finally, in Chapter 4 we extend our panic buying model to account for uneven customer arrivals and the possibility of increased consumption as customer habits change due to drawn-out disasters and/or their after effects. Given the retailer's indistinguishable experience of panic buying and increased consumption as depleted inventory, we conduct scenario analysis to determine the efficacy of different interventions under different scenarios. We find that increased consumption generally has a more pronounced effect compared to panic buying. Furthermore, frequent replenishments are more effective in prolonging or restoring system stability especially when panic buying is present. Our analysis provides a preliminary framework for incorporating panic buying and increased consumption in making retailer decisions.