Modeling Supply Chain Decisions for Resource Sharing with an Application to Ventilator Allocation

COVID-19 Webinar Series

We present a stochastic optimization model for allocating and sharing a critical resource in the case of a pandemic. The demand for different entities peaks at different times and an initial inventory for a central agency is to be allocated. The entities (states) may share the critical resource with a different state under a risk‐averse condition. The model was applied to study the allocation of ventilator inventory in the COVID‐19 pandemic by FEMA to different U.S. states. Results were generated and reported for different demand scenarios (average, above average, etc), including a worst‐case where the demand is at the upper limit of the 95% confidence interval of state needs prediction from a prominent model. An important finding of this study is that a central agency (FEMA) can act as a coordinator for sharing critical resources that are in short supply over time to add efficiency in the system. Moreover, through properly managing risk‐aversion of different entities (states) additional efficiency can be gained. An additional implication is that ramping up production early in the planning cycle allows reducing shortfall significantly. The optimal timing of this production ramp‐up consideration can be based on a cost‐benefit analysis.