A Cost‐Sharing Mechanism for Multi‐Country Partnerships in Disaster Preparedness

Jessica Rodríguez‐Pereira, Burcu Balcik, Marie‐Ève Rancourt and Gilbert Laporte

Production and Operations Management, 2021, vol. 30, issue 12, 4541-4565

Abstract: We study a multi‐country disaster preparedness partnership involving the joint prepositioning of emergency relief items. Our focus is the Caribbean region, which faces increasing disaster threats due to weather‐related events and has committed to share its resources for regional integration. We collaborate with the inter‐governmental Caribbean Disaster and Emergency Management Agency (CDEMA), which is interested in creating a methodology to equitably (fairly) allocate the costs necessary to operationalize this commitment. We present alternative cost allocation methods among the partner countries by considering their risk level and their ability to pay. Specifically, we adapt some techniques such as the Shapley value, the equal profit method, and the alternative cost avoided method, and we also propose a new insurance‐based allocation scheme to determine the country contributions. This mechanism, which is formulated as a linear programming model, sets country premiums by considering the expected value and the standard deviation of country demands and their gross national income. We discuss the structural properties of these methods and numerically evaluate their performance in achieving an equitable allocation scheme with respect to three equity indicators based on the Gini coefficient. Our proposed cost‐sharing mechanism not only achieves superior solutions compared with other methodologies with respect to the proposed equity metrics, but is also computationally efficient. We numerically illustrate how it can be used to obtain alternative cost allocation plans by giving different weights to disaster risk and economic standing parameters, and we analyze the benefits and fairness of the partnership in a transparent way.

Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://doi.org/10.1111/poms.13403

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:popmgt:v:30:y:2021:i:12:p:4541-4565

Ordering information: This journal article can be ordered from
http://onlinelibrary ... 1111/(ISSN)1937-5956

Access Statistics for this article

Production and Operations Management is currently edited by Kalyan Singhal

More articles in Production and Operations Management from Production and Operations Management Society
Bibliographic data for series maintained by Wiley Content Delivery ().