Abstract—This study considers the problem of calculating safety stocks in disaster situations inventory systems that face demand uncertainties. Safety stocks are essential to make the supply chain, which is controlled by forecasts of customer needs, in response to demand uncertainties and to reach predefined goal service levels. To solve the problem of uncertainties due to the disaster situations affecting the industry sector, the concept of Emergency Safety Stock (ESS) was proposed. While there exists a huge body of literature on determining safety stock levels, this literature does not address the problem arising due to the disaster and dealing with the situations. In this paper, the problem of improving the Order Quantity Model to deal with uncertainty of demand due to disasters is managed by incorporating a new idea called ESS which is based on the probability of disaster occurrence and uses probability matrix calculated from the historical data. Keywords—Emergency Safety Stocks, Safety stocks, Order Quantity Model, Supply chain. I. INTRODUCTION ANAGING supply chain network has become a vital global issue in the context of the severe effect of natural disasters and a wide variety of other reasons such as industrial plant fires, transportation delays, work stoppages, and it remains a largely unexplored area in research and practice. With increasing numbers of natural and man–made disasters, organizations are facing challenges due to limited number of available experienced logistics experts and the need for better coordination of those involved in vulnerable logistics networks. Moreover, companies running lean operations no longer have inventory or excess capacity to make up for production losses, resulting into rapid escalation of material flow problems to wide-scale network disruptions. The dynamic nature of the global supply chain environment dictates that the companies with resilient supply chains in the future will have a sustainable competitive advantage over other firms. Over the past three decades, the number of reported disasters has increased fourfold. Around 6.1 billion people have been affected by disasters with an estimated damage of almost 2.3 trillion dollars [1]. An adequate level of mitigation Yousef Abu Nahleh and Alhasan Hakami are with the School of Aerospace, Mechanical and Manufacturing Eng., RMIT University, Melbourne, VIC3000, Australia (phone: +61399256226; e-mail: s3319062@student.rmit.edu.au, s3213700@student.rmit.edu.au, respectively). Arun Kumar is with the School of Aerospace, Mechanical and Manufacturing Eng., RMIT University, Melbourne, VIC3000, Australia (phone:+61 3 9925 4328; e-mail: a.kumar@rmit.edu.au). Fugen Daver is with the School of Aerospace, Mechanical and Manufacturing Eng., RMIT University, Melbourne, VIC3000, Australia (phone:+61 3 9925 6008; e-mail: fugen.daver@rmit.edu.au). measures and a coordinated post-disaster relief logistics management may help to reduce the loss of both human lives and economic damage. Time plays a critical role in the logistic plan, and it directly affects the survival rate in affected areas. This makes the task of logistics planning and supply chain management more complex than conventional distribution problems. The emergency supply chain differs from the normal supply chain in many ways such as huge surge of demand with a short notice, damaged roadways, chaotic behavior of victims, break-down of infrastructure and communication lines, short lead time, major uncertainties about what is actually needed and what is available at the site, large volumes of critical supplies to be transported and so on. Under these critical conditions, delivering supplies becomes an extremely difficult task for the suppliers with limited or nonexistent transportation capacity. The design of a reliable emergency supply chain network is hampered by a lack of (1) knowledge about how emergent supply chains operate and interact, (2) methods to analyze and coordinate the flows of both priority and non-priority goods, and (3) scientific methods to analyze logistics systems under extreme conditions. Furthermore, forecasting and evaluating the reliability of transportation networks are significant for path selection in emergency logistics management under earthquake and other natural disasters. The reliability of arcs and nodes of a transportation network is time-varying under disaster conditions. In major non-natural disasters such as terrorist attacks (e.g., September 11, 2001) or natural disasters such as the Hurricane Katrina of 2005 a disaster management structure organizer will face significant problems of emergency services and evacuation. In several disasters, the disaster area requests residents to be evacuated of the area and need to be moved to safe places as fast as possible, leading to a sudden and great surge of demands for emergency services. Humanitarian relief organizations and NGO’s are mostly non-profit organizations with the idea of providing critical services to the public in order to minimize the pain and sufferings after a natural disaster. According to UN Office for Humanitarian Affairs, there is an increasing human vulnerability in natural disasters, 244.7 million affected in 2011, and in complex emergencies 54 million in need of life- saving assistance in 2011. Furthermore, emergency management involves preparing for disaster before it happens, responding to disasters immediately, as well as supporting, and rebuilding societies after the natural or human-made disasters have occurred. It is essential to have comprehensive Improving Order Quantity Model with Emergency Safety Stock (ESS) Yousef Abu Nahleh, Alhasan Hakami, Arun Kumar, Fugen Daver M World Academy of Science, Engineering and Technology International Journal of Mechanical and Mechatronics Engineering Vol:7, No:12, 2013 2451 International Scholarly and Scientific Research & Innovation 7(12) 2013 ISNI:0000000091950263 Open Science Index, Mechanical and Mechatronics Engineering Vol:7, No:12, 2013 publications.waset.org/9996737/pdf