Research on physical reserve and raw material reserve strategy of emergency material supply agreement enterprises considering post-disaster spot market procurement

Considering the extreme uncertainty of sudden-onset event, the emergency material purchasers, e.g., government and rescue organizations, usually prefer the agreement form with flexibility procurement mechanism. However, the enterprises involved in the cooperation will face great risks and costs. In order to reduce the adverse impact of the uncertainty of emergency material demand on the agreement enterprises, this paper constructs an emergency material supply agreement cooperation model based on quantity flexibility contract. Considering the existence of the spot market, the government's optimal decisions on the regular procurement quantity and flexibility procurement quantity are derived, followed by the enterprise's optimal decisions on the physical reserve quantity and the raw material reserve quantity. Then, numerical simulation and sensitivity analyses are adopted to further analyze the influence of several system parameters on the optimal decisions and the costs (or benefits) of the government authority and the enterprise. The result shows that quantity flexibility contract can coordinate the emergency material supply chain under certain conditions. The government will seek for the enterprise's help with its highest ability, but the enterprise should pay attention to the key factors such as the government's storage capacity, post disaster procurement cost and availability when making reserve strategy. © 2022, Editorial Board of Journal of Systems Engineering Society of China. All right reserved.