Optimal stock and capital reserve policies for emergency medical supplies against epidemic outbreaks

Killing tens of thousand people and bringing tremendous loss, epidemics have been one the most huge urgent threats for all human kind. Given abruptness epidemic outbreaks, quick access to sufficient medical supplies is essential. Most existing research focuses on reserving physical stocks only, while some authors also consider production capacity. This study first capital reserves besides stocks, a practice that instance used in China. We characterize closed form graphically under what conditions certain reserve policy (no reserves, safety stock mixed reserves) optimal. A key insight increased demand uncertainty sometimes leads lower levels, although combined do increase. In such situations, limit risk obsolescence, it optimal rely less more reserves.