International Journal of Production Research

ISSN: 0020-7543 (Print) 1366-588X (Online) Journal homepage: https://www.tandfonline.com/loi/tprs20

An inventory management approximation for

estimating aggregated regional food stock levels

Ole Hansen, Hanno Friedrich & Sandra Transchel

To cite this article: Ole Hansen, Hanno Friedrich & Sandra Transchel (2019): An inventory
management approximation for estimating aggregated regional food stock levels, International
Journal of Production Research, DOI: 10.1080/00207543.2019.1657248

To link to this article: https://doi.org/10.1080/00207543.2019.1657248

Published online: 22 Aug 2019.

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International Journal of Production Research, 2019
https://doi.org/10.1080/00207543.2019.1657248

An inventory management approximation for estimating aggregated regional food stock levels
Ole Hansen ∗ , Hanno Friedrich and Sandra Transchel

Department of Logistics, Kühne Logistics University, Hamburg, Germany

(Received 1 February 2019; accepted 11 August 2019)

Food is an important resource in disaster management, and food stock levels hold significance for disaster mitigation research
and practice. The presence or absence of food stocks is a vulnerability indicator of a region. A large part of overall food stock,
before a disaster strikes, is held by private companies (retailers, wholesalers and food producers). However, there is little-
to-no information on the food stock levels of commercial companies, and no approach exists to derive such information. We
develop an approximation model based on essential inventory management principles and available data sources to estimate
aggregated food stock levels in supply networks. The model is applied in a case example that features dairy product stock
levels in the German state of Saxonia. The resulting overall stock levels are normalised, and their usability is showcased in a
simple vulnerability analysis. Disaster managers are provided with a model that can be used estimate otherwise unavailable
data and facilitates investigations into the regional resilience of an area. The limitations of our study are based on the
aggregated nature of the supply network structure and data usage (i.e. in the model, we do not consider any seasonality or
trend effects).
Keywords: inventory management; disaster management; vulnerability analysis; macro analysis; aggregate planning

1. Introduction
1.1. Motivation
Natural disasters worldwide are leading to the loss of human lives and serious financial damage. Consequently, disaster
management has become more important over the last decades. Disaster management includes four phases – mitigation,
preparedness, response and recovery – with the former two phases occurring before a disaster and the latter two afterwards
(Altay and Green 2006). Before a disaster occurs, the pre-positioning of inventory and capacities is a typical measure exam-
ined by researchers and practitioners. Although humanitarian logistics differ from commercial logistics in many respects
(see, e.g. Balcik and Beamon 2008), the goal of inventory management in humanitarian logistics is to answer the basic
questions of storage (when/where/how much to store) (Balcik, Bozkir, and Kundakcioglu 2016).
The information and data regarding available resources are of paramount importance during all phases of the disaster
management process. However, studies conducted in humanitarian logistics and disaster management face a lack of usable
data (Starr and van Wassenhove 2014; Gupta et al. 2016; Kunz et al. 2017). A lack of supporting information due to a lack
of information sharing Dwivedi et al. (2017) can make coordination difficult both before and after a disaster (Balcik et al.
2010), and relying only on hypothetical data can compromise the reliability of the results when applied in practice (Kunz
et al. 2017; Kovacs and Moshtari 2018). This is, for example, underscored by Whybark et al. (2010) who point out that need
assessment in emergencies, which is dependent on the amount of resources present in a region, is problematic. While many
models and studies use real data at least in part, there are recurring blind spots in the data. One such blind spot is the amount
of resources that are already available in areas that might be affected by disasters in the future.
Resources that are relevant for disaster management are held by different actors such as international relief organisa-
tions, host governments, militaries, local and regional relief organisations, and private-sector companies (Balcik et al. 2010;
Day 2014). The current study focuses on the inventory held by private companies, which is neglected by many disaster
management approaches, as is illustrated by some examples in Section 1.2. Specifically, within this category, the study
focuses on food resources, which are among the most vital post-disaster resources (Day et al. 2012; Kunz, Reiner, and Gold
2014).

*Corresponding author. Email: ole.hansen@the-klu.org

© 2019 Informa UK Limited, trading as Taylor & Francis Group

2 O. Hansen et al.

Information on companies’ food stock levels on an aggregated scale is helpful for all disaster management measures that
take available resources into account. As examples, pre-positioning inventory considerations should be based on as many
sources as possible; this information is also essential in assessing regional pre-disaster vulnerabilities.

1.2. Literature and current situation

While there is a rich body of literature on commercial supply chain management of food products on the firm level, see for
example Wang, Fang, and Liu (2016) or Zhang et al. (2019), and on the level of individual supply chains, see for example
Minner and Transchel (2017) or Chen et al. (2018), a more macro-focused perspective that looks at the system of food
supply chains of a country or region as a whole, is rare.
In humanitarian logistics, case studies on pre-positioning food inventories before a disaster rarely include historical or
real data for resource supply in and around an affected area, let alone data on company food supply. Balcik and Bea-
mon (2008) address the strategic configuration of the relief chain by developing a mathematical model that proposes
locations of distribution centres and the amounts of relief goods to store. The relief goods in that study include food
items such as high-energy bars and meals-ready-to-eat (MRE). Balcik and Beamon estimate their demand data based on
mortality rates and population data and note that better data would improve the model implementation. Rawls and Turn-
quist (2010) develop a tool for emergency response planning. Using a two-stage process, the goal is to optimally store
various emergency supplies at specific locations in specific quantities while the planner is under uncertainty about if, or
where, a natural disaster will occur. They include food such as MRE in their approach. While they base the demand for
food during a disaster on historical data on hurricanes, they do not include any data of food supply within the region into
their model.
More recently, Ni, Shu, and Song (2018) simultaneously optimised facility location and emergency inventory pre-
positioning decisions for a single-commodity disaster relief network. Their commodity was a bundle of products and
included ration food with a shelf-life of up to 3 years. They used some real data in their case analysis of the 2010 Yushu
County earthquake; however, they draw demand for relief commodities and the portion of remaining usable pre-positioned
resources from hypothetical statistical distributions. Chen, Liang, and Yao (2018) analyse how to pre-position relief invento-
ries while minimising costs. In their work, demand uncertainty after a disaster arising from the actual needs of the population
is modelled using a random variable. For a comprehensive review and analysis of the field of inventory management in
humanitarian logistics, we refer the reader to Balcik, Bozkir, and Kundakcioglu (2016).
The responsibility for the security of a population, including the provision of food, lies with the sovereign government
of a country. While commercial companies provide services that supply the population with food, they are not responsible
for sustaining this supply if shortages occur.
However, when considering the factual and legal position in times of crisis, it becomes clear that normal market mech-
anisms no longer necessarily apply. In Germany, there is a Food Safety and Provision Law (ESVG), which is aimed at
securing food provision and governing prevention measures in regards to a supply crisis (BGBI 2017). It defines a supply
crisis as a situation in which the coverage of the vital demand for food in essential parts of the nation is seriously endangered,
and such endangerment cannot be resolved in general or in a timely fashion, or be resolved only through disproportionate
means, without sovereign intervention. As a result, the state government can take control over private businesses’ using
legislative decrees if these criteria are met. Thus, it can access food resources located in or close to an affected area, which
supports and potentially accelerates the relief process. The availability of commercial companies’ food stocks in times of
crisis makes information regarding such stocks valuable for disaster managers within the government and humanitarian
organisations, even before a disaster occurs. It enables them to map the resilience of regions to derive plans of action for
better disaster preparedness. For example, regions with relatively low food stocks could be supplemented with measures
such as government food silos or the pre-positioning of inventory by humanitarian organisations. As shown in the examples
of Balcik and Beamon (2008), Rawls and Turnquist (2010) and Ni, Shu, and Song (2018) introduced above, approaches in
the humanitarian logistics research usually focus on the pre-positioning of food resources that are especially designed for a
disaster situation, such as high-energy bars, ration food with a long shelf-life or meals-ready-to-eat (MRE). Our approach
complements these measures by supplying information on all food resources that are part of commercial food supply chains
and already located within a region. Local sourcing has advantages such as low transportation costs, no customs processes,
lower transportation times (Balcik and Beamon 2008) and a higher likelihood that the food will match the local population’s
diet (Kovacs and Spens 2007). Whybark (2007) considers the location and acquisition of nearby resources to be an impor-
tant element of disaster planning in general. Thus, apart from pre-disaster resilience considerations, this information can
be shared with humanitarian organisations and local authorities to make every resource available during the response and
recovery phases. We would like to emphasise that measures derived from our approach should not be viewed as standalone
with regard to the many challenges of disaster management.
 International Journal of Production Research 3

It thus becomes clear that effective disaster management during a crisis and good prevention before a crisis are possible
only with reasonable knowledge on inventories. In reality, however, the collection of such data is next to impossible during
a crisis as well as difficult and time consuming before one. In our example of Germany, an important element of food
emergency planning is the legislative decree ‘Food Industry Reporting Ordinance’ that addressed the need to collect data on
food stocks. Government agencies collected what they deemed to be the most important data from the food industry and the
retail sector. Originally planned to occur every four years, a survey was last sent out in 2007 (BBK 2011), and it has been
currently suspended due to cost and effort considerations (DIPTB 2017).
The survey could be seen as a compromise since although companies must relinquish control over their assets during a
declared disaster, they were, understandably, resistant to share confidential data during times of normalcy (Menski 2016).
The companies have no incentive to voluntarily provide such data as it might compromise their business practices and allow
access to corporate secrets. Ultimately, company site managers were asked to provide information that did not require any
bases, nor was the information checked or validated. This information was then collected on paper and manually re-entered
into a digital system, which required a lot of time and, again, left room for human error.
The survey also had several shortcomings in terms of design. It addressed the production and warehouse facilities of a
supply chain but omitted all supermarkets and retail stores, which hold a large proportion of overall commercial inventories.
The recipients were asked to declare the current inventory levels of their facility, measured in tons of weight, or as a range,
measured in days. In terms of detail, the survey was limited to merely four categories of food: frozen, cooled, dry and fresh.
The replies were only snapshots of one particular survey day. Finally, the survey was rather expensive as every facility in
the country that exceeded a production or storage threshold quantity had to reply to it. As a result, there is currently no
information on food stock levels at the companies, and, to the best of our knowledge, no approach exists to derive this
information. This assessment was confirmed in talks with other researchers and governmental officials during meetings and
workshops with regard to different research projects on the topic.

1.3. Research objectives and approach

The goal of this research is to develop an approach for estimating the average stock levels within commercial food supply
chains to facilitate the analysis of the as-is situation of food stock levels of regions, or even nations. A national view on
resilience becomes increasingly important as the provision of security becomes more complex for sovereign governments
(Fjäder 2014). The same can be said for regional resilience as disasters often affect one or several regions instead of whole
countries and a country’s regions can exhibit quite different levels of resilience in response to the consequences of a disaster.
It is thus in the interest of governments and disaster managers to be able to assess regional resilience based on information
such as the food inventories within a region.
While it is obviously very challenging to collect primary data on the inventories of private companies, many secondary
data sources are already available. Moreover, the determination of companies’ food inventories mostly follows understand-
able logics. This leads to the question of whether it is possible to use these secondary data and the understanding of logistics
processes to estimate food inventories. Following the initial motivation, the emphasis is not on a precise estimation of inven-
tories at each location but rather on an estimation of the approximate regional inventory levels available. From this follows
the need for a methodology that can yield aggregate regional food inventory levels, which is the starting point of this work.
We model the overall food network bottom-up using a three-stage supply system, i.e. mapping the locations of all
points of sale sites (i.e. supermarkets, grocery stores), warehouses and production sites and the supply relationships among
them. We estimate the inventory levels for each location using essential inventory management models from the operations
management (OM) literature.
The general idea of using OM models on a micro-level is employed in the field of freight transportation modelling by
de Jong and Ben-Akiva (2007) but with the aim of determining order sizes and not inventory levels. This and similar works
such as Friedrich (2010) incorporate some OM inventory modelling aspects; however, they do so for only a single stage
of the food supply system, and they consider only order sizes, which are not the same as inventory. To the best of our
knowledge, to date, OM models have not been applied to derive inventory levels of companies on a national level.
The model introduced in this work includes the three most commonly held types of inventory: cycle stock, safety stock
and pipeline stock. These values are aggregated to yield regional food stock levels. The overall approach can be described as
a macro-logistical model of food stock levels. We refer to macro logistics in terms of the purpose of the model (estimation
of inventories for a region) and not in terms of the resolution of the model. Hence, we do not model relationships on a
national scale as done, for example, by Havenga (2015), who analyses logistics cost time series for the United States and
South Africa over an extensive time horizon. Solakivi et al. (2018) are a bit closer to our approach as they base their analysis
of the national logistics market of Finland on data from the company level. In this research, however, we derive results on
an even more detailed micro-level, which distinguishes between different sites per company, before we aggregate them to
4 O. Hansen et al.

draw conclusions on a macro-level. As the purpose is on the macro level, operations at companies are only considered as
assumptions or input. For an overview that covers operations from a sustainability aspect in food supply chains, we refer
the reader to Zhu et al. (2018)
We classify the required input data for the model into two categories: spatial structure network data and logistics process
data. The concept and term spatial structure network data is inspired by traditional transport modelling approaches, where
locations and facilities in a network to be modelled are represented as structural data. Equivalently, behavioural data is
another input, which represents the behaviour of the actors that move within the network. Since the actors in our model are
logistics facilities and their behaviour is expressed through processes, we termed it logistics process data (Lohse, Lätzsch,
and Schnabel 1997; Ortúzar and Willumsen 2011).
Spatial structure network data describe the location of all facilities and their relationship to one another, spanning the
overall network. The latter covers demand data and firm behaviour regarding inventory management. This includes values
such as mean demand, fluctuation of demand or target service levels. Such data can be more easily and less frequently
surveyed than during the previous survey. For the application of the model in this paper, we estimate missing data points
based on realistic values from the literature.
To showcase the applicability, we employ the model for a case example that features the German federal state of Saxonia,
a region that has been subject to catastrophic events resulting from the flooding of areas surrounding the local river, the
Elbe, in the recent past (2002, 2006 and 2013). We focus on the commodity group of dairy products and use the resulting
information on regional food stock levels to perform a simple vulnerability analysis.
One contribution of the current study is the introduction of a new methodology for estimating aggregate food stock
values for regions. To our knowledge, this approach does not yet exist. Furthermore, the outcomes of this research can
support disaster managers, who can employ the model to generate estimates of regional food stock levels. They can use the
results to investigate the current status of food stock levels in a specific area, applying them, for example, in a vulnerability
analysis. Humanitarian and crisis managers can use the resulting data to more efficiently pre-position inventory and to
coordinate with other actors. The results can also support government agencies in designing surveys to collect better data.
As for the structure of the paper, Section 2 describes the database used in this research. Section 3 introduces the network
structure assumed in the model and goes into detail regarding the inventory management principles that are assumed to
estimate inventories. Section 4 features the showcase of the German state of Saxonia, and Section 5 concludes.

2. Description of database
In terms of public data, the official online database of the Federal Statistical Office of Germany, Destatis (Destatis 2018),
provides a substantial amount of useful information for our goal. Custom reports for values such as production quantities,
number of employees or number of companies can be differentiated by industry sectors and subsectors and product cate-
gories. Furthermore, these values can be split by region, and regional clustering can also be customised. The level of regional
detail depends on the chosen level of the regional clustering norm NUTS (Nomenclature des unites territoriales statistiques),
an international, established geocode standard for referencing the subdivisions of countries. However, the information in
these databases does not reveal the identities of companies, which are confidential.
The data on specific companies can be leveraged by accessing commercial databases. One such database is TradeDimen-
sions, which is offered by the Nielsen Corporation market research firm. Among other information, this database contains
the addresses of warehouse and point-of-sale facilities for the 100 food retailing companies with the highest sales per year.
The data include ZIP code, city and, in most cases, street name and street number. Also included are the supply relationships
between warehouses and points of sale for each company. Another commercial database that is highly useful for our aims is
offered by the GfK1 , a market research institute that provides consumption data. These data are gathered in fully monitored
stores and from the cash registers of other stores. Of particular interest for this research is the subset of data on food product
sales. As part of the payment process, the quantities and monetary values of sold products are documented. This information
is aggregated and can be purchased at a preferred level of detail.

3. Modelling food stock levels

The general structure of the stylised food supply chain assumed in the model is displayed in Figure 1. Products are considered
to be relevant when they are ready for direct sale; i.e. ingredients such as raw milk and live animals or crops on a field are
not considered to be relevant. Accordingly, food products are delivered from production sites (where they are processed,
portioned or packaged) to warehouses (where they are stored and possibly re-packaged) and from there passed on to points
of sale (where they are offered to the customer). We describe a maximum of three subtypes of stock for each type of facility.
 International Journal of Production Research 5

Figure 1. Structure of the stylised food supply chain.

We define the model on the level of stock-keeping units (SKU). Thus, for a specific product at the SKU level, such as
a certain flavour of a specific brand of yoghurt, it is reasonable to assume that a warehouse or point-of-sale sources this
product from only one supplier. This allows us to associate only one production site with each warehouse and only one
warehouse with each point of sale, and it thus keeps the model simple. Hence, to estimate aggregate food inventories over a
product category such as yogurt, the model must be executed for every specific product within the category, i.e. each flavour
of each producer. Although the number of separate calculation processes can, as a result, be high, the complexity of the
problem is significantly reduced.

3.1. List of indices and variables

V Set of all nodes in the network (production, warehousing, sales)

P Set of all nodes p at the production stage
W Set of all nodes w at the warehousing stage
S Set of all nodes s at the sales stage
R Set of all regions in the network, index j
N + (·) Set of neighbours on the outgoing side of a node in the network
C(·) Average cycle stock at a facility
μ(·) Average daily demand at a facility
f (·) Delivery frequency to a facility in days
t(·) Length of the production cycle for a facility’s demand
q Number of times raw materials of the food product are supplied per day
B(·) Safety stock value at a facility
α(·) Target service level at a facility
Z(α) Function that returns the required safety factor given the target service level α
σ (·) Standard deviation of demand occurring at a facility
τ (·) Time needed to transport a delivery to a facility, in days
T(·) Average pipeline stock value at a facility
O(·) Overall average stock at a facility, for all subtypes of stock
F Average food stock level for a region, for all stages and subtypes
G Population of a region
Y Food stock coverage of a region
R Days of stock coverage of a region

3.2. Network structure

Let V denote the set of all nodes in the entire food network, i.e. across all three stages. Subset P ⊂ V comprises all production
sites, subset W ⊂ V all warehouses and subset S ⊂ V all points of sale. We assume that P, W and S are disjunctive subsets,
i.e. V = P ∪ W ∪ S and P ∩ W = ∅, P ∩ S = ∅ and S ∩ W = ∅.
A facility is allocated to exactly one of the three stages. We assume that there are more nodes at the sales stage than
at the warehousing stage, which, in turn, has more nodes than the production stage. This is because on the level of detail
of an SKU, a warehouse of a company can be assumed to have only one supplier. Similarly, a point of sale has only one
warehouse delivering to it. As, conversely, a warehouse can supply multiple points of sale and a production site can supply
multiple warehouses, it follows that |P| < |W | < |S|.
The production, warehousing, and sales facilities can be located in different geographical regions. Let Rj ⊂ V denote
the subset of all nodes in V that are located in region j. Without any restriction, it holds that each facility (node) in the
network is associated with exactly one region, i.e. Rj ∩ Rl = ∅ for j = l, such that V = ∪j Rj . Hence, we can define Pj ⊂ V
as all production facilities in V that belong to region j. Analogously, we define Wj ⊂ V and Sj ⊂ V as all warehousing and
point-of-sale facilities, respectively, that belong to region j.
6 O. Hansen et al.

Figure 2. Structure of example network.

Figure 2 showcases the type of network generated by our approach. All nodes are associated with one of the three stages:
triangles represent points of sale, circles represent warehouses, and squares represent production sites. The arrows represent
unidirectional supply relationships among the facilities. The facilities on the left are located in the ‘West’ region whereas
those on the right are in the ‘East’ region. This means that the triangles on the left side are nodes with the characteristics
stage = point of sale and region = West.
All warehouses connected to a production site can be expressed as neighbours on the outgoing side of that production
site and are denoted as N + (p). This set of warehouses is a subset of all warehouses in the network: N + (p) ⊂ W . Similarly,
all points of sale that are neighbours on the outgoing side of a warehouse can be denoted as N + (w) and are a subset of all
points of sale in the network: N + (w) ⊂ S.

3.3. Model formulation

The food stock model describes the average inventory level of a food product at the SKU level for each of the three stages.
Average inventory is split into average cycle stock, safety stock, and average pipeline stock. We do not aim at actively
optimising the stock levels of food products at companies but rather at estimating them, based on normal business practice.
As a consequence, the modelling considerations assume an implicit cost-minimising behaviour of companies or a cost-
minimising versus customer satisfaction trade-off for safety stock modelling. Since we are ultimately aiming at generating
aggregated stock levels using a macro logistics approach, we neglect any potential correlation effects.
We will separately describe and focus on the three subtypes of stock, cycle, safety and pipeline stock (Silver, Pyke, and
Thomas 2016). The calculation of cycle stock uses either given ranges of delivery frequencies between facilities or order
sizes generated using the economic order quantity approach. Safety stock is determined by an optimisation approach that
uses a given target service level, average demand, fluctuation of demand and lead time and employs a statistical distribution
to represent the demand process for the food product. Pipeline stock is by definition a fragment of cycle stock and dependent
on the time it takes to transport an order from one facility to the next.

3.3.1. Cycle stock

First we consider cycle stock C and start with the sales stage. Information on sales per SKU can for example be acquired
from the GfK database described in Section 2. We convert these values into average daily demand per store and company
and denote them as μ(s). Since we are interested in average values, we ignore potential daily fluctuations.
 International Journal of Production Research 7

Let f (s) describe the delivery frequency from warehouse to point of sale measured in deliveries per day. Unfortunately,
this information is currently unavailable. Until it becomes available, we turn to benchmark values taken from the literature
for our case example, as is described in more detail in Section 4. For each point-of-sale node s ∈ S, let C(s) denote the
average cycle stock:
μ(s)
C(s) = (1)
2 · f (s)
We assume inventory replenishment to be approximately uniform over time since the absolute inventory level is large in
comparison to withdrawals, which in this case is customer demand. Because warehouses do not sell products directly to
customers, there are no records of sales. Therefore, we leverage the supply relationships between the points of sale and the
warehouses of a food retailer in the TradeDimensions database, which contains supply relationships between warehouses
and points of sale. This defines N + (w) for all w ∈ W . Summing up the demand values μ(s) for the connected points of sale
s ∈ N + (w) for a warehouse w ∈ W yields demand at the warehouse μ(w):

μ(w) = μ(s) (2)
s∈N + (w)

For the delivery frequencies between production site and warehouse, we again turn to values from the literature for the case
example. The average cycle stock at the warehousing stage C(w) for all nodes w ∈ W can be described by:
 μ(s)
C(w) = (3)
2 · f (w)
s∈N + (w)

The approach for modelling the cycle stock of finished products at the production stage is different because the process is
fundamentally different at this stage. Production uses raw ingredients as input, and raw ingredients do not count towards
the inventory we are trying to estimate. Only the production output counts towards relevant cycle stock. We assume the
production process to be continuous: The number of finished products builds up evenly until the demand of a warehouse
is satisfied and inventory is reduced by the size of the delivery. Furthermore, we let production speed be sufficient to meet
all demand from the associated warehouses and to account for different demand values per warehouse. Consequently, this
implies that as the production speed of the facility is sufficient to meet all demand and the facility aims to minimise holding
costs, it plans its deliveries in a way that allows for a steady and uniform production process.
In conclusion, the production rate is uniform, with production output matching demand. We also introduce the assump-
tion of common cycles for warehouses that are supplied by the production site to make the modelling controllable. The
delivery frequencies to all warehouses connected to the production site can be integrated into one common cycle. With the
constant production rate and the consecutive production of batches for each warehouse, the overall production process can
then be described as a production cycle that repeats itself (Transchel and Minner 2009).
Based on public statistical data on employment and production output per region (Destatis 2018), a synthetic population
of production facilities can be generated using a Monte Carlo simulation (see Ottemöller and Friedrich 2019 for the exact
procedure). As a result of the simulation, each production site of the resulting population exhibits a distinct location and a
production value. The latter is interpreted as the demand of the production site μ(p).
Furthermore, we use the directed choice approach described by Ottemöller and Friedrich (2019). It can be applied to
generate synthetic connections between facilities, in this case of the warehousing and production stages. This defines the set
N + (p) ⊂ W of warehouses connected to a production site, for each production site p ∈ P.
There is no real delivery frequency as raw ingredients are being delivered, and only food products ready for consumption
are within the scope of this research. Moreover, a stock of raw ingredients does not instantaneously translate into finished
food products; there is a production process in between. The fraction of the overall production cycle time needed to produce
the demand for an example warehouse w1 is denoted as t(w1 ), and overall production cycle time is denoted as t(p).
Now, the demand value of a warehouse  can be used to describe the fraction it makes up in comparison to the demand
of all warehouses via (μ(w1 )/f (w1 ))/ w∈N + (p) μ(w)/f (w). The relationship of t(w1 ) to t(p) can then be stated as directly
proportional. It follows that
t(w1 ) μ(w1 )/f (w1 )
= (4)
t(p) w∈N + (p) μ(w)/f (w)

The production times for the batches corresponding to the warehouses’ demand values can differ because batch sizes can
differ. The average cycle stock at the production site can hence also differ over the length of a production cycle. Accounting
8 O. Hansen et al.

Figure 3. Example of inventory-level development at a production site with three connected warehouses.

for these intervals of differing average cycle stock levels, the average cycle stock at the production stage over a production
cycle can be stated as

 μ(w) μ(w)/f (w)

C(p) = · (5)
2 · f (w) w∈N + (p) μ(w)/f (w)
w∈N + (p)

An illustration of this concept is given in Figure 3, where three example warehouses exhibit different demand values. The
production site accumulates finished food products until the amount to be delivered to a warehouse is reached, at which
point the stock level goes back to zero. This process is then repeated until all warehouses connected to the production site
have been served, and it starts over for the next production cycle.

3.3.2. Safety stock

Safety stock refers to inventory that is held to cover any type of uncertainty in demand and supply. For clarity of notation,
safety stock is denoted as B. We do not consider lead time or delivery uncertainty. As we ultimately seek to obtain aggregated
values in our macro logistical approach, the potential effects of delivery uncertainty on the average food stock values that
we aim to estimate can be deemed negligible.
The fluctuation of demand μ(s) points of sale is the standard deviation of daily demand σ (s). To quantify the level of
customer demand satisfaction, the target service level denoted as α is used in OM models (Silver, Pyke, and Thomas 2016).
It describes the non-stock-out probability during a period. In the case example, benchmark values from the literature will be
used for this parameter. Furthermore, we introduce the function Z. It returns the inventory value needed to ensure the target
service level α given average demand and its standard deviation by using a given statistical distribution. More precisely, it
returns the factor with which the standard deviation must be multiplied to achieve an expected customer demand satisfaction
level of α. The statistical distribution should be chosen in accordance with the demand characteristics of the food product
in question. Since safety stock hedges against the uncertainty between deliveries, we again use the delivery frequency f (s).
Consequently, safety stock at a point of sale B(s) is defined as


B(s) = Z(α(s)) · σ (s) · 1/f (s) (6)

This definition of safety stock can be derived from the standard definition that is found, for example, in Silver, Pyke, and
Thomas (2016) when replacing the lead time with the delivery frequency f (s).
Similar to the demand at the warehousing stage, the standard deviation of demand at a warehouse σ (w) is the aggregation

of all standard deviations of the points of sale connected to it, σ (w) = s∈N + (w) σ (s).
2
 International Journal of Production Research 9

Given the delivery frequency to the warehouse f (w), safety stock at the warehousing stage B(w) for a facility is then
described by:
   
B(w) = Z(α(w)) · σ (w) · 1/f (w) = Z(α(w)) · σ 2 (s) · 1/f (w) (7)
s∈N + (w)

Turning to the production stage, the standard deviation of demand is given by the square root of the sum of the standard
deviations of demand of all warehouses connected to that production site:
 
σ (p) = σ (w)2 (8)
w∈N + (p)

Here, the overall production cycle time t(p) is of interest. This is because there is no delivery frequency to the production
site in terms of finished food products because ingredients do not yet count towards relevant inventory. In this case, the time
between batch outputs for a specific warehouse can be described by t(p). Safety stock at the production stage B(p) for a
facility is then given by
  
B(p) = Z(α(p)) · σ (w)2 · t(p) (9)
w∈N + (p)

3.3.3. Pipeline stock

Every time an order is transported, goods are tied up in transit until they reach their destination. From the perspective of
disaster management, these are valuable resources that are already within range of people in need. The purpose of pipeline
stock in our research is originally commercial because it is part of the normal business process of a company. A truck
that carries a full order of a food product can be interpreted as an additional, mobile warehouse. In that sense, the concept
resembles that of floating warehouses or sea basins, which have recently been brought into the discussion as they can be
used to pre-position resources as part of disaster preparation (Tatham, Kovács, and Vaillancourt 2016; Sharifyazdi et al.
2018). However, the difference from pipeline stock, as we understand it, is that pre-positioning is done with a humanistic
goal in mind whereas pipeline stock is always present in companies’ supply chains. Pipeline stock that is in transit between
a warehouse and a point of sale is allocated to the point-of-sale facility whereas the stock that is in transit between a
production site and a warehouse is attributed to the warehouse. This means that there is, by definition, no pipeline stock
at the production stage. Additionally, there might not always be an ongoing transport between two facilities of the food
network. This is the case if the delivery frequency leads to intervals between deliveries greater than the transport time τ .
Therefore, we estimate the average pipeline stock over the duration of the interval between deliveries 1/f .
Transportation times can be directly taken from a public navigation system such as Google Maps or similar public
routing services given the network structure. Using the transport time τ to a facility measured in days and a modification of
(1) for the full order, the average pipeline stock at the sales stage T(s) of a facility is yielded by

T(s) = τ (s) · μ(s) (10)

The pipeline stock at the warehousing stage can be estimated in a similar fashion. This yields the average pipeline stock at
the warehouse stage T(w) as
T(w) = τ (w) · μ(w) (11)

3.3.4. Overall food stock and food stock coverage

As a result, average cycle stock C(·), safety stock B(·) and average pipeline stock T(·) can be summed to represent the
overall average stock at a facility O(·):
O(·) = C(·) + B(·) + T(·) (12)
As is often the case with absolute numbers, the informative value of these terms is limited. The overall food stock levels are
most likely to be higher in a region with a very high population than in one with a fairly low population, and they do not
necessarily translate into information about the degree of vulnerability of a region in terms of food supply. As Kunz et al.
(2017) note, KPIs are important in the humanitarian sector for the purpose of transferring benefits from research to practice.
10 O. Hansen et al.

To gain additional insight and provide a basic KPI regarding spatial resource distribution, the overall food stock levels can
be combined with secondary information. Furthermore, this process can normalise the information for the regions and thus
construct a better indicator of vulnerability. An example for information that can be incorporated into such an indicator is the
total population per region. Combination with the population count for a region yields the amount of food stock per capita,
which can be interpreted as a type of food stock coverage. This is a more meaningful indicator of potential vulnerability
and can in turn be evaluated as either an absolute value or in relation to neighbouring regions. To formalise this process, the
indicator is denominated as the per capita food stock value Y . Let Gj represent the population of a region j, and let Fj describe
food stock summed for all the different stages of the food network in a region j. This yields Fj = Oj (s) + Oj (w) + Oj (p).
It follows that Yj can be calculated using the food stock per region Fj and the population per region Gj :

Yj = Fj /Gj (13)

4. Case example
The example features the state of Saxonia, Germany, a region that has been subject to flooding of the areas surrounding the
local river, the Elbe, in the recent past. The flooding events of 2002 and 2013 caused multiple human casualties and several
billion euros in property damage, and they caused areas to be isolated from their normal supply streams (Undine 2016). At
certain points, military helicopters had to be used for the delivery of raw products to sustain food production (Balster et al.
2016). In these cases, information on the location and extent of commercial food stocks could have improved the provision
of the food products. The recent research indicates that the frequency and intensity of events such as flooding will increase
in the coming decades (Kotlarski et al. 2012) and that flooding is the most frequent disaster worldwide (Sodhin and Tang
2014). Since food insecurity can result from flooding (Rufat et al. 2015; ten Brinke et al. 2017) and has a negative impact
on the health of the afflicted, it is a good example for a catastrophic event for which a government should prepare.
The case specifically investigates dairy products, which make up a large portion of the common human diet and as
a result also play an important role in food retailers’ businesses. Following Balster and Friedrich (2019), we classify the
commodity group of dairy products into four article groups: fresh milk, durable milk, fresh milk products and cheese. To
clarify, a product such as butter is in the article group of fresh milk products.

4.1. Adjusted database

The databases described in Section 2 also list data sources to which the authors had no or only restricted access. Therefore,
we briefly describe where we had to use alternative data sources or data-generating procedures. The evaluation and exami-
nation of the available databases as well as some of the supporting work regarding the transition of the data into the model
were initiated by the authors within the research project SEAK, which was funded by the Federal Ministry of Education and
Research (Balster et al. 2016). The project analysed food supply security in pre-disaster phases within Germany. Whenever
we use the results or partial results of the project, we reference them accordingly.

4.1.1. Spatial structural network data

4.1.1.1. Locations of facilities For warehouses points of sale, locations were obtained using a commercially available data
set (Balster et al. 2016). From the population of companies within this data set, the eight companies with the highest annual
sales were chosen to account for the majority of total listed sales. To obtain meaningful spatial clustering, level 3 of NUTS
was selected for the case. In the case example, this approach directly corresponds to the 13 rural districts of Saxonia, which
form the set R of all regions j ∈ R considered. Their names and the related acronyms used in this work can be found in the
appendix.

4.1.2. Logistics process data

4.1.2.1. Transportation time As the case addresses regions within a German state, and distances for the transport of dairy
products tend not to exceed a few hundred kilometres, we keep the transportation time estimation simple by assuming that
transportation time τ is 1 day for all transports.

4.1.2.2. Sales stage demand As access to the GfK database was not available, we used information from the TradeDi-
mensions database (TradeDimensions 2012) to approximate average demand values. However, the data do not allow for the
computation of demand fluctuations described by σ (s). Hence, we turn to industry expertise and evidence described in the
 International Journal of Production Research 11

Table 1. Parameter values for different article groups and stages.

Article group f (s) f (w) t(p) CV (s) α(s) α(w) α(p)
AG01 2/6 2/6 2/6 0.35 95% 98% 98%
AG02 2/6 2/6 2/6 0.5 95% 98% 98%
AG03 1/6 1/6 1/6 0.3 95% 98% 98%
AG04 1/6 1/6 1/6 0.5 95% 98% 98%

food supply chain management literature to retrieve the benchmark values. A normalised description of a product’s demand
fluctuation is given by the coefficient of variation CV , with CV = σ/μ, which sets the total fluctuation in relation to the
total demand.
The coefficient of variation for consumer products can become quite high, especially for products with very low turnover,
which can take on values far in excess of 1.0 (Snyder 1984). As an example from the practice related to dairy products,
van Donselaar et al. (2006) find that the median coefficient of variation for the weekly demand of perishable products is
0.345 in a large-scale study including over 200 stores of a large Dutch food retail chain. Another case study by Ketzenberg
and Ferguson (2008) finds the values for the coefficient of variation ranging from 0.5 to 0.7 for a variety of common
and slow-moving packaged perishable products. However, these values are mostly given on a weekly basis. It is highly
likely that daily fluctuations are greater than their weekly aggregates because, in most cases, uncertainty adds up less than
proportionally over time (Eppen 1979). We measure fluctuation of demand in units per day and assume the base values for
the coefficient of variation for each article group as stated in Table 1. By applying a Monte Carlo approach, specific values
for CV can be selected for each SKU under consideration. We do so by employing a classical ABC scheme to assign SKUs
to subcategories within each article group.

4.1.2.3. Delivery frequencies Given their perishability and high turnover values, dairy products have high delivery fre-
quencies, as supported by evidence from scientific and practical case studies. Deliveries from warehouses to points of sale
for the general class of perishables are often assumed to occur daily (Viet, Behdani, and Bloemhof 2019), while the product
category of dairy can occur in some cases even more than once a day (see, for example, Småros et al. 2004, Kotzab and
Teller 2005, Broekmeulen and van Donselaar 2009 or Kuhn and Sternbeck 2013). This does not mean that every dairy prod-
uct is delivered on a daily basis; rather, it implies that in many cases, a delivery containing dairy products arrives each day.
Consistently, we assume frequent deliveries occurring every 1–3 days as base values across the four defined article groups
and 6 days of sale per week as a basis, as displayed in Table 1. Moreover, within a company, the replenishment strategy for
an article group is assumed to be consistent for all warehouses and their links to suppliers (production sites) and customers
(points of sale). This results in identical delivery frequencies for the deliveries of a company between the respective two
stages. The delivery frequency f (s) from the warehousing stage to the sales stage is then in effect for all links per company.
The same applies for f (w), the link between the production stage and the warehousing stage.

4.1.2.4. Target service levels As dairy products can be considered an essential article group, their target service levels
should be high. Turning to the literature, some reported values range from 95% to 98% (Småros et al. 2004) for warehouses.
We use these as a basis and assume the same values for the production stage. For points of sale, the reported values are
similar but with a higher maximum, with variations from 95% to 99% (Småros et al. 2004; Thron, Nagy, and Wassan 2007).
Here, we assume values at the lower end of the reported scale, as listed in Table 1.

4.2. Model input and output

4.2.1. Model input and resulting food stock levels
Food stock values on the SKU level must again be aggregated into article groups to allow for a manageable and meaningful
analysis. Therefore, we constructed four article groups: fresh milk (AG01), durable milk (AG02), fresh milk products
(AG03) and cheese (AG04).
The estimation of regional food stock levels for Saxonia starts at the highest level of detail for the values of average
cycle stock, safety stock and average pipeline stock for one SKU at a facility of a specific stage; see Table 2.
This process is repeated for every food product offered at the example facility, and the overall values for each of the four
article groups can be derived by summation, as illustrated in Table 3, for every company in scope.
12 O. Hansen et al.

Table 2. Model input and output at a point of sale for example product, demand and stock values in kg.
Example product
f (s) CV (s) α(s) μ(s) τ (s)
2/6 0.35 95% 27.73 1
Average cycle stock C(s) Safety stock B(s) Average pipeline stock T(s)
27.73 24.34 27.73

Table 3. Subtypes of stock and overall stock for all article groups at a point-of-sale facility, in kg.
C(s) B(s) T(s) Overall stock O(s)
Product #1 27.73 24.34 27.73 79.80
Product #2 14.36 26.66 14.36 55.39
... ... ... ... ...
Product #n 1.75 5.07 1.75 8.57
Sum AG01 149.70 188.59 149.70 487.99
... ... ... ... ...
Sum AG02 84.40 155.93 84.40 324.72
... ... ... ... ...
Sum AG03 92.29 142.79 184.57 419.65
... ... ... ... ...
Sum AG04 45.95 123.07 91.91 260.93

Table 4. Overall stock in kg and number of sales stage facilities per company for Bautzen region.
Company
#1 #2 #3 #4 #5 #6 #7
AG01 487.99 250.20 2,308.67 583.50 317.33 352.45 299.97
AG02 324.72 165.55 1,527.36 388.28 211.16 234.53 198.46
AG03 419.65 258.59 2,400.28 501.80 272.90 303.10 311.88
AG04 260.93 139.57 1,289.88 312.01 169.68 188.46 167.60
Sum 1,493.29 813.91 7,526.19 1,785.59 971.07 1,078.54 977.90
#Points of sale 14 47 5 13 33 15 9
Overall stock 20,906 38,254 37,631 23,213 32,045 16,178 8,801
Sum overall stock 177,028

The resulting values for overall stocks per article group at the point-of-sale facility of a company are then multiplied
with the number of point-of-sale facilities that are associated with the company and located in the region in question. Table 4
illustrates this step for the Bautzen (BZ) region.2
On a regional level, the process yields the complete information on average food stock levels for the districts of the state
of Saxonia, as shown in Table 5. Listed are the values for the different subtypes of stock per region j, Oj (s), Oj (w) and
Oj (p), for all regions. The raw data on inventory levels for dairy products in the 13 regions provide a first useful overview
of the general situation. As observed, the majority of food stock at the warehousing stage is located in the Meissen (MEI)
region whereas the greatest part of stock at the production stage is stored in the BZ region.
At the sales stage, the stocks are more evenly distributed, which is because points of sale can be found in every district.
However, there are still huge differences among the different regions. Going one step further, we can use this information to
perform a first crude vulnerability analysis of the regions that connects this information with the populations of the regions.

4.2.2. Vulnerability analysis

Vulnerability plays an important role in the disaster research in general. Weichselgartner (2001) notes that vulnerability
analysis can be used to reduce the losses caused by natural hazards. They can form the basis for disaster preparation
measures such as stock pro-positioning. Cutter, Boruff, and Shirley (2003) use demographic and socioeconomic data on
the county level for the United States to build a vulnerability index that generates insights into vulnerability factors. In
 International Journal of Production Research 13

Table 5. Food stock levels per district and stage, cumulated for all article groups, in kg.
District Sales Warehousing Production Stock over all stages
j Oj (s) Oj (w) Oj (p) Fj

BZ 177,028 25,540 270,698 473,226

C 120,014 0 750 120,764
DD 221,976 0 0 221,976
ERZ 240,335 0 7,581 247,916
GR 181,847 0 18,450 200,297
L (LK) 157,284 84,290 11,030 252,604
L 248,527 0 3,912 252,439
MEI 152,412 268,330 0 420,742
FG 188,860 0 56,768 245,628
TDO 126,004 38,620 0 164,624
PIR 146,903 27,360 784 175,047
V 140,580 0 27,900 168,480
Z 210,990 0 14,379 225,369

Table 6. Food stock per capita and district (in kg) and inventory coverage in days.
District Total food stock levels (kg) Population (in 1,000) Food stock per capita (kg) Stock coverage (days)
j Fj Gj Yj Rj

BZ 473,226 320.1 1.48 4.29

C 120,764 243.2 0.50 1.45
DD 221,976 526.4 0.42 1.22
ERZ 247,916 366.0 0.68 1.97
GR 200,297 275.2 0.73 2.11
L (LK) 252,604 266.3 0.95 2.75
L 252,439 527.3 0.48 1.39
MEI 420,742 252.2 1.67 4.84
FG 245,628 326.6 0.78 2.26
TDO 164,624 205.2 0.80 2.32
PIR 175,047 251.6 0.70 2.03
V 168,480 243.0 0.69 2.00
Z 225,369 340.0 0.66 1.91

another analysis, Zhou et al. (2014) use data on different regions’ demographics, their populations’ financial status and their
degree of industrialisation to evaluate population and societal vulnerability to natural disasters in Chinese counties. Closely
related to our case, Fekete (2012) documents the challenges that come with spatial risk and vulnerability assessments, and
he illustrates his approach using a case example of river flooding in Germany. He highlights a justified critique regarding a
lack of normalisation of his data and suggests using population values per county to make the results more comparable. We
address this point during the design of the vulnerability indicator. The results of the vulnerability analysis can be found in
Table 6.
Notably, the three largest cities in the state, Leipzig (L), Dresden (DD) and Chemnitz (C), are the regions with the lowest
per capita values. This could follow from the fact that because of high real estate leasing costs or purchasing prices, cities
are not the first choice for most retailing and food production companies in regard to establishing a new site. For disaster
managers, it could be of interest that according to this analysis, the urban areas of Saxonia are not covered as well as the
rural areas. Moreover, there are differences among the rural areas. In some regions, such as BZ and MEI, the values of food
stock per capita are high, while in others, such as ERZ, GR, PIR, V and Z, the values are not that much higher than those
in the cities. These regions might be even more vulnerable than the cities despite their comparably high relative food stock
values since people in rural areas live more geographically spread out, and the infrastructure might make it more difficult
to reach them in case of an emergency. A potential first step for disaster managers in terms of preparation could consist of
developing measures that support rural regions with the lowest food stock per capita values. If a disaster has already struck
and the cold chain is compromised, decision makers can identify where the largest food stocks are located to collect and
reallocate them. Evidence from practitioners suggests that the cold chain can be kept intact for up to 48 h, even if the power
to facilities is interrupted (Balster 2016).
We also calculated the days of stock coverage Rj = Yj /m for each region in the last column of Table 6. We used values on
the consumption of dairy products taken from the statistical yearbook (BMEL 2017), which yielded an average consumption
of m = 0.345 kg over all dairy products per capita, per day. For additional insights, the results could be combined with
14 O. Hansen et al.

Figure 4. Heat map of average per capita food stock levels for Saxonian regions.

information on infrastructure such as accessibility by road, rail and air or the location of public institution’s facilities.
This would provide a better information base when making decisions regarding future infrastructure or public institution
investments that aim at public safety. Another valuable assessment could result from including the age structure of a region
in the analysis. Regions with a relatively large amount of elderly people and young children might need more attention in
terms of disaster preparation. Finally, we want to present a useful means of visualising this type of information. In general,
the data that are tied to geographical positions or areas can be displayed using heat maps. Based on information from
Table 6, the per capita food stock level for each region was calculated and displayed in a heat map of the Saxonian regions.
The results are illustrated in Figure 4.

5. Conclusion
This paper has highlighted the relevance of information on food stock levels in the context of disaster management. The
information generated by the legal decree formerly issued by the government is not useful in disaster management. To
address this issue, we developed a model based on currently available data sources and additional information that could
be easily surveyed. The model can be used to estimate food stock levels on a customised and aggregated regional level.
To estimate disaggregated food stock levels, we used stylised OM models. Furthermore, we described and parametrised the
required data.
To showcase the applicability of the developed model, we introduced a case example that focused on the commodity
group of dairy products in the German state of Saxonia. We described the data inputs for the case and applied the model
for four article groups within the commodity group of dairy products. We then used the resulting information as input for a
vulnerability analysis that took population numbers of the different regions into account.
This work contributes to disaster management by supplying a tool that helps increase and improve the level of informa-
tion that can be used by disaster managers in both pre-disaster preparations and post-disaster operations. The level of detail
of the resulting information on food stock levels is higher than that of data gathered by past surveys, and the model can be
used in many different settings, as often as desired. While we used NUTS-3 regions as a basis for geographical classification
in the case, any other level of regional breakdown is feasible as long as corresponding input data are available. Regional
resilience can hence be analysed for customised clusters. Similarly, values for single products can be calculated, or large
article groups can be tailor-made for the disaster manager, depending on the desired context and the quality of the available
input data. The application potential of the model is universal, although depending on the available database, adjustments to
the input data might have to be made. Through our research, disaster managers are provided with a model that can estimate
otherwise unavailable data and allows investigations into the regional resilience of an area. The limitations of our study
include the aggregated nature of the supply network structure and the data usage (i.e. we do not consider any seasonality or
trend effects in the model).
 International Journal of Production Research 15

Lastly, in terms of our model’s contributions, we would like to point to the related area of sudden disruptions in (food)
supply chains. Increasing pressure causes countries and their governments to take on cost-intensive efforts to expose the
chokepoints and vulnerabilities of their food networks and their national and regional resilience in food supply (Global
Food Security 2015; Bailey and Wellesley 2017). Such sudden disruptions may have various causes, for example, natural
disasters such as floods, droughts, or hurricanes; food security issues such as animal diseases; or trade-political issues –
even in developed countries – such as the food supply risk due to Brexit. Understanding the national preparedness for such
sudden disruptions in food supply chains will become increasingly critical in the future. This is where our model and its
results could be used in a non-disaster context.
Regarding future research, we want to highlight the general area of information supply for disaster management. In the
humanitarian research, the existence of crucial information is often assumed from the start, and models and concepts are
designed accordingly such as in the domain of the pre-positioning of inventory prior to a disaster. However, many of these
valuable solutions and insights can no longer be applied if the initial information is unavailable or only partly available.
In addition, resources might be present in areas that have been or will be affected by disasters. These resources are of
great value for disaster management and humanitarian logistics and can vastly increase their performance. We therefore
urge others to investigate possible ways to improve the general quality of the information on which disaster management
practices base their approaches.

Disclosure statement
No potential conflict of interest was reported by the authors.

Notes
1. It was not possible to use this database in the study, and the data in question were acquired by alternative means. We elaborate on
this aspect in chapter 4.
2. Note that only seven of the above-mentioned eight companies have facilities in Bautzen.

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Appendix

Region Abbreviation
Bautzen BZ
Chemnitz C
Dresden DD
Erzgebirgskreis ERZ
Goerlitz GR
Leipzig L (LK)
Leipzig (City) L
Meissen MEI
Mittelsachsen FG
Nordsachsen TDO
Sächsische Schweiz-Osterzgebirge PIR
Vogtlandkreis V
Zwickau Z