Publication Type

Journal Article

Version

acceptedVersion

Publication Date

9-2014

Abstract

We analyze the efficacy of different asset transfer mechanisms and provide policy recommendations for the design of humanitarian supply chains. As a part of their preparedness effort, humanitarian organizations often make decisions on resource investments ex ante because doing so allows for rapid response if an adverse event occurs. However, programs typically operate under funding constraints and donor earmarks with autonomous decision-making authority resting with the local entities, which makes the design of efficient humanitarian supply chains a challenging problem. We formulate this problem in an agency setting with two independent aid programs, where different asset transfer mechanisms are considered and where investments in resources are of two types: primary resources that are needed for providing the aid and infrastructural investments that improve the operation of the aid program in using the primary resources. The primary resources are acquired from earmarked donations. We show that allowing aid programs the flexibility of transferring primary resources improves the efficiency of the system by yielding greater social welfare than when this flexibility does not exist. More importantly, we show that a central entity that can acquire primary resources from one program and sell them to the other program can further improve system efficiency by providing a mechanism that facilitates the transfer of primary resources and eliminates losses from gaming. This outcome is achieved without depriving the individual aid programs of their decision-making autonomy while maintaining the constraints under which they operate. We find that outcomes with centralized resource transfer but decentralized infrastructural investments by the aid programs are the same as with a completely centralized system (where both resource transfer and infrastructural investments are centralized).

Keywords

asset transfer, humanitarian logistics, supply chain design

Discipline

Finance and Financial Management | Operations and Supply Chain Management

Research Areas

Operations Management

Publication

Production and Operations Management

Volume

23

Issue

9

First Page

1511

Last Page

1521

ISSN

1059-1478

Identifier

10.1111/poms.12177

Publisher

Wiley

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.1111/poms.12177

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