To mitigate warehousing and spoilage costs in emergency supply stockpiling, governments often partner with private companies to distribute emergency supplies across various locations in the commercial supply chain for regular demand rotation. Commonly, a “red line” is assigned to each location, with inventory below this line reserved solely for emergencies. Previous literature has proposed a Virtual Stockpile Pooling (VSP) strategy that dynamically adjusts red lines among the locations based on real-time demand information, omitting the emergency retrieval process. This study introduces an Integrated Virtual Stockpile Pooling and On-Event Retrieval (VSPR) strategy that refines VSP by incorporating emergency retrieval costs into its design. We present a novel ranking method to solve VSPR’s three-stage optimization process, leading to a collaborative base-stock system, a priority-based red-line reassignment, and a greedy algorithm for efficient supply retrieval. We show that VSPR strategically reserves supplies at “key locations”, optimizing cost and response efficiency. A case study demonstrates that, compared with VSP, VSPR has the potential to reduce operational costs by up to 13.8% while enhancing service levels by up to 4.9%. VSPR’s applicability extends to many other contexts, including resilient supply chain management, healthcare operations, energy and natural resource management, and military logistics.

Fang Liu is currently a professor in Operations Management at the Durham University Business School, Durham University. She received her PhD in Operations Management from Fuqua School of Business, Duke University. Her primary research interests are in humanitarian operations, mechanism design, and sustainable operations. She is currently working on multiple projects, including various allocation problems with applications in humanitarian operations and e-commerce. Her paper has appeared in Operations Research, Manufacturing and Service Operations Management, and Production and Operations Management. She is a reviewer for many top journals such as Operations Research, Math of OR, MSOM, and POM.