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• W2380341390 abstract "The sudden outbreak of public crises,such as SARS,Bird Flu,and Wenchuan Earthquake,is exerting strong pressures on the government to develop a humane society.Emergency materials are always in great demand when emergency events occur.Most companies have been reserving an extra production capacity as part of contingency plan for emergency events.However,the ordinary capacity reserve can hardly meet the sudden demand caused by an unanticipated public crisis.China has been experiencing an increasing number of emergency events recently.The Chinese government has mandated that governmental institutions at all levels establish production capacity reserves and have flexible production capacity that can be quickly expanded.In other words,companies are required to maintain a certain capacity level for producing emergency materials during the routine operation according to governmental regulations.Our literature review shows that production capacity reserves in a supply chain can improve profit for a company if the market demand is suddenly increased and its supply chains are stable.Most suppliers are willing to build production capacity reserve if other supply chain partners are willing to share costs and risks.However,companies may risk losing customers if product price is required to include additional costs caused by the excessive production capacity reserve.Companies are more willing to work with the government to increase their production reserves according to an emergency plan.The existing literature primarily centers on the study of production capacity reserve among companies,rather than between the government and companies.This paper tries to address this issue by conducting a quantitative analysis of planned emergency funds from the perspectives of both the government and companies.The objective of this study is to propose an emergency fund planning model for companies to meet the government's mandate of reserving production capacity for emergency events.We make a few assumptions before proposing the emergency fund planning model.The first assumption is that the government,at all levels,owns physical reserves to meet the initial demand of emergency materials,and companies have the same contingency reserves for unanticipated changes in market demand.The second assumption is that both the government and companies have the intention of collaborating with each other to cope with the ongoing demand of emergency materials.In the course of building production capacity reserves,both entities will make decisions according to the same mathematical model of budget constraint function and the Douglas utility function.The third assumption is that response to the governmental policy of production capacity reserves(i.e.,planed emergency funds) and utility function are identical for all companies that produce the same materials.In this paper,we first discuss problems associated with the mismatch of emergency funds caused by difficult coordination of a large number of companies.The larger the number of companies producing the same materials,the more difficult the coordination between governments and companies in producing capacity reserves will be.Secondly,the government's planned emergency fund is limited if the relationship between the government and companies are in the master-slave mode.On the other hand,companies should keep their planned emergency capacities in accordance with the government's planned emergency funds if the government needs to rely on the contribution of companies.Thirdly,the master-slave mode(government to company) is more appropriate for matching emergency fund than the peer-to-peer form(company to company) or the alternative master-slave mode(company to government).Finally,quantitative evidence is provided to illustrate the rationality of the proposed method.Our analysis results indicate that the government and companies should keep their emergency funds in proportion to production capacity reserves.The implementation of production capacity reserves does not merely rely on the amounts of funds provided by the government or enterprises.Also,the appropriate arrangement of the emergency funds is subject to the number of companies that produce homogeneous emergency materials.The government should formulate investment strategies to guide enterprises in bearing social responsibility and easing the shortage of emergency funds.This guidance can help build production capacity reserves in order to improve the security level of emergency materials in a region.In reality not all companies are willing to bear social responsibility when emergency events occur.Perhaps,companies' utility function and their response to the government policy are not identical.Despite these limitations,analytic methods and research findings in this paper have practical implications and make contributions to the existing literature." @default.
• W2380341390 created "2016-06-24" @default.
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• W2380341390 date "2011-01-01" @default.
• W2380341390 modified "2023-09-26" @default.
• W2380341390 title "Emergency Fund Planning Model Based on Associated Production Capacity Reserve of the Government and Enterprises" @default.
• W2380341390 hasPublicationYear "2011" @default.
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