Emergency stocks: A theoretical analysis and an illustration for Israel

The paper develops a methodology for designing and evaluating the performance of emergency stocks. The system is required to meet consumers' demands in all emergency situations at a given level of reliability and least possible costs. The model takes into account the various stochastic elements that determine the performance of the system, including the frequency of emergency situations and their expected duration, the pace of replenishing the stocks, the consumption rate in an emergency situation, and the opportunity for stock building prior to the occurance of an emergency on the basis of advance information about the severity of the strategic situation.