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Prevention, preparedness, response
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Optimal Resource Allocation for Preparedness and Recovery of - - PowerPoint PPT Presentation
Optimal Resource Allocation for Preparedness and Recovery of - - PowerPoint PPT Presentation
Optimal Resource Allocation for Preparedness and Recovery of Interdependent Systems Cameron MacKenzie Defense Resources Management Institute Naval Postgraduate School Prevention, preparedness, response 2 Research questions What is the
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Research questions
- What is the optimal allocation of resources
pre-disruption (prevention and preparedness) and post-disruption (response and recovery)?
- How should resources be allocated among
different industries to help those industries recover?
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Deepwater Horizon oil spill
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Key assumptions
- Objective function minimizes expected
economic impact of a disruption
- Preparedness resources reduce chances of
disruption
- Response resources reduce economic impact
- f disruption
β Allocation to individual industries β Allocation to all industries
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Impacted area
Texas, Louisiana, Mississippi, Alabama, and Florida
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Directly impacted industries
Fishing Real estate Accommodations Amusements Oil and gas
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Resource allocation model
min ππ²βΊππ β 1 β π π π β π¨π ππ = π πexp βπππ¨π β ππ»ππππ πππ¨π»ππππ ππ π¨π + π¨πΊππ‘β + π¨πππππΉπ‘π’ππ’π + π¨π΅ππ£π‘π + π¨π΅ππππ + π¨πππ + π¨π»ππππ ππ β€ π π¨π β₯ 0, π¨π β₯ 0, π¨π»ππππ ππ β₯ 0 i = {Fish, Real Estate, Amusements, Accommodations, Oil}
Normal production Direct impacts with no resources Allocation to industry Allocation to benefit all industries Effectiveness of recovery allocation Overall budget Interdependent matrix
subject to π = π exp βπππ¨π
Vector of direct impacts (proportional) Probability of disruption Probability with no resources Allocation to prepare Effectiveness of preparedness allocation Increased production if no disruption
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Input parameters for oil spill
Industry ππ (per $1 mil) π π Fishing 0.074 0.0084 Real estate 0.047 Amusements 0.0038 0.21 Accommodations 0.0027 0.16 Oil and gas 0.0057 0.079 Preparedness ππ = 0.0031 π = 0.045 All industries ππ»ππππ ππ = 8.6*10-5
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Parameter estimation for fishing
$62 million lost sales from Gulf Coast fishing ο 0.84% of regionβs fishing and forestry production Studies on food safety and impact of positive media stories ο $792,000 to reduce losses by $40 million
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Allocation for prevention
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Allocation for response
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Sensitivity analysis for prevention
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Probability of oil spill π Effectiveness of allocating for preparedness ππ Proportion of $10B budget allocated for preparedness
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Sensitivity analysis for π π β ππ
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Sensitivity analysis for response
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Effectiveness of allocating to all industries ππ»ππππ ππ (Γ10-4) Proportion of budget allocated to all industries
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Allocation to all industries
π¨π»ππππ ππ > 0 if ππ»ππππ ππ > πβ
1 πβ = 1 ππ
π¨π>0
+ exp π β π¨π π²βΊπβππ πππ 1 ππ
π¨π>0 1 ππ
π¨π>0 β1
π²βΊπβππ π
π¨π=0
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Effectiveness of recovery allocation Overall budget Allocation to prepare Normal production Direct impacts with no resources Column of interdependent matrix
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Preliminary conclusions
- Allocating to prevent a disruption may be small
compared to allocation to respond
β Assumptions that prevention reduces chances of disruption β Assumption that money not allocated to prevention can increase regional production if no disruption
- Pre-disruption allocation should increase if
β Preparedness reduces impacts β Decision maker is risk averse
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Preliminary conclusions
- As budget increases, greater incentive for
response allocation to be allocate to benefit all industries versus targeting individual industries
- Future research can include multiple scenarios
Email: camacken@nps.edu
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