The earlier a lockdown, the higher the excess demand will be, found the research © LUIS ROBAYO/AFP via Getty Images
The earlier a lockdown, the higher the excess demand will be, found the research © LUIS ROBAYO/AFP via Getty Images

Is rationing the answer to panic buying in a second lockdown?

Will Green is news editor of Supply Management
7 September 2020

Governments should consider rationing as a way of dealing with panic buying in any future lockdowns, according to a study.

The study, by Durham University Business School, said demand forecasting was essential for both policymakers and supply chain professionals in tackling the current, and future, pandemics.

Researchers – using data from the US, UK, Germany, India and Singapore up to mid April 2020 – employed statistical models and machine learning to predict the growth of Covid-19 cases and excess demand.

“We show that the earlier a lockdown is imposed, the higher the excess demand will be for groceries,” said the research paper.

“Furthermore, the longer the lockdown lasts the higher the cumulative excess demand and thus the higher the need for planning for production and inventory.

“Consequently, a policy recommendation for the governments will be to secure high volumes of inventory for such products before the lockdown; and if not possible, consider radical interventions such as rationing.”

The study found excess demand for groceries and electronics during lockdown and reduced demand for automotive and clothing.

“The ability to forecast excess demand during the pandemic early could have significant implications for both supply chain managers and policymakers,” said the paper. “The former can benefit from early warnings about where resources will be needed and the latter from a data driven approach to government interventions, e.g. by prioritising critical supply chains.”

Dr Kostas Nikolopoulos, professor in business information systems and analytics at Durham University, warned forecasting was a “complex task”.

“We cannot ignore that the progression of Covid-19 across countries drives changes in immediate needs and consumer behaviour, for example, panic buying and overstocking at home,” he said.

“Such changes put an enormous strain to the respective supply chains. For instance, when consumers start panic buying dry pasta, eventually, the whole supply chain involving eggs, flour, wheat, is affected.

“Therefore, forecasting becomes essential for effective governmental decision making, for managing supply chain resources, and for informing very difficult political decisions as, for example, imposing a lockdown or curfews. Yet forecasting the evolution of the pandemic i.e. the growth in the number of cases per country, is a complex task, partly because of the limited history of pandemic data.”

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