DOI: https://doi.org/10.15368/theses.2011.4
Available at: https://digitalcommons.calpoly.edu/theses/450
Date of Award
1-2011
Degree Name
MS in Industrial Engineering
Department/Program
Industrial and Manufacturing Engineering
Advisor
Reza Pouraghabagher
Abstract
The purpose of this thesis is to model the effects of anti-price gouging (APG) legislation on the costs to businesses during the recovery period of a disaster. A system dynamics model of a business’s replenishment procedures is used to simulate the effects of APG legislation on business performance. Economists have published expansive research on the effects of price ceilings on supply and demand, but there is little research evidence on the operational consequences of price ceiling legislation on business costs. APG legislation increases consumer’s forward buying and shortage gaming after a disaster by removing price incentives to be frugal. Forward buying and shortage gaming are two key drivers of the demand variation and the bullwhip effect, which leads to increased inventory costs, misguided capacity expansion and reduced service levels. These costs have a negative impact on local businesses that are critical to a community’s economic health and recovery from a disaster. The simulation results from this thesis show that APG legislation is not an effective regulatory response to decrease the impact of disasters on affected communities.
Included in
Industrial Engineering Commons, Operational Research Commons, Other Operations Research, Systems Engineering and Industrial Engineering Commons, Systems Engineering Commons