The emergency decision-making: How to trigger the level of emergency response plan with forecast updates

This paper explores the problem that how managers activate contingency plans by stages under disruptions. We reckon that the expected total cost will be a minimum when the start level of the contingency plan matches the level of the actual loss. An autoregressive model is constructed to give the optimal policy of activating contingency plans by stages. Then the numerical simulation results assure the effectiveness and the influence factors of the optimal policy are given.