Measuring the efficacy of inventory with a dynamic input-output model

This paper extends the recently developed dynamic inoperability input-output model (DIIM) for assessing productivity degradations due to disasters. Inventory policies are formulated and incorporated within the DIIM to evaluate the impact of inventories on the resilience of disrupted interdependent systems. The Inventory DIIM can provide practical insights to preparedness decision making through explicit tradeoff analysis of multiple objectives, including inventory costs and economic loss reductions. The model is demonstrated in several illustrative examples to depict various nuances of inventory policies. The paper then culminates in a case study that utilizes input-output and inventory accounts from the Bureau of Economic Analysis.