**2.2 Resale and refill strategy**

It is then clear that the DRS management should be considered from a business perspective, to work with upstream producers, suppliers and logistics service providers on product manufacturing, procurement planning, inventory policy implementing and logistics service operations. We need to define and examine the responsiveness of product value to changes in time to find out the turning point of the quality change. From the operations management point of view, a value deterioration function of an emergency supply item can be constructed to determine the optimal timing to remove old inventories for resale and replenish with new items, provided the trade-off among the logistics cost, the holding cost and the value depreciation.

Removed packaged food and bottled drinks, especially those dried items stored for disaster relief, are in good condition and might be welcomed to a secondary market. Although the freshness degrades over time, the food still has acceptable quality, clothes and essential rescue tools are almost at the same quality levels as new. From a business perspective, reselling the old inventories with markdown prices to a legitimate secondary market not only guarantees accurate access to available emergency supplies but also benefits the economy and environment by reducing tremendous waste. Therefore, managing the DRS is far more than to maintain the right type, quantity, and time availability of them. To design a detailed plan for monitoring the supplies in the inventory, understanding the secondary market, selling them at the right time points, and refilling the inventory has great potential.

The key point of the resale and refill strategy is to properly estimate the time point of turnovers. Long-time storage causes the quality level and commercial value of these items decreasing while too frequent replenishment can directly push up the logistics cost. Therefore, we need to identify the best timing to refresh old items. It depends on the deterioration of product quality and market value over time. Different than the fresh product, users mainly estimate the freshness of packaged food from expiry date information because the value deterioration is difficult to see in appearance. Thus, how product value perishes with age is another question to answer.

To start the resale and refill strategy, we first need to investigate the perishability in the quality of emergency supplies over time. Generally, the value of package food is depreciated very little at the initial period but suffers a drastic reduction when approaching the end of the lifetime. To recognize the turning point of the deterioration in product value, we consider the time responsiveness of value to show the responsive sensibility of the value deterioration to changes in time. Then, we can define the benefit function of DRS and conduct numerical analysis based on the historical data to manage the optimal replenishment timing to remove old items and replenish them with fresh ones. Our research reveals that there always exists a maximum benefit point throughout the product's lifetime for each item type.

Furthermore, to manage DRS in the business process, we need to work closely with product suppliers and logistics service providers. It is essentially a disaster relief supply chain management problem that aims at reducing the operational cost and enhancing the social and humanity effectiveness and efficiency. A sufficient cooperation and coordination scheme promises an overall successful implementation for the resale and refill strategy even it is not profit-oriented. It gives room for product manufacturers in material purchasing, production planning, and quality control, for disaster relief material merchandiser in product searching, purchasing and storage planning, for transportation service providers in earlier programming, routing design and labour arrangement in each refresh cycle.

Lastly, perhaps the most critically, the business perspective based operations can significantly improve the DRS management level. The government initiated and leaded DRS inventory, particularly in those local and first-line warehouses, does not have much incentive of economic revenue, and even neglects the management cost. A large number of local warehouses are assigned to local government agencies as a small part of their daily duty and are thus managed not at a professional standard. It inevitably causes undermined quality control problem and accelerates the product deterioration. With a proper revenue-sharing scheme, the local government is encouraged to assign officers specifically to be in charge of the DRS management. The job duties are clearly defined so that economic key performance indexes would be designed. They are responsible for secondary market research, various marketing operations, communication with product suppliers, and logistics service providers. This resale and refill initiative has been tested and implemented in a town in China for more than three years on a small scale. The practices are currently under research from both regulation and sociological aspects, to study the related issues and evaluate the effects. But the initial implementation experience shows that the quality of the operations is largely enhanced, the management cost is significantly reduced, and grassroots government agencies generally perform positive to tasks.
