Everyone knows the frustration of not having the right change to complete a purchase. Dr. Yunxia (Peter) Zhu, assistant professor of supply chain management and analytics, believes his research exploring the supply chain of currency may contain solutions to a situation made worse by the COVID-19 pandemic.

“At the beginning of the pandemic, consumers were faced with shortages in toilet paper and other products,” said Zhu, who came to the University of Nebraska–Lincoln in 2018. “For these products, the flow in the supply chain is one direction – manufacturers produce products and then retailers sell those products to customers.”

Zhu explained the supply chain for currency gets more complicated. The coin circulation process creates a multidimensional chain traveling from U.S. Mints to banks, and then to retailers and customers.

“Due to COVID-19, customers are avoiding coins and prefer to use contactless payment methods. Unlike dollar bills, when we’re talking about smaller denominations, consumers are less likely to carry them when they go shopping so they get lost in the circulation chain. That’s the main reason for shortages,” said Zhu.

To deal with coin shortages over the long-term, Zhu’s paper, “A Framework for Analyzing the U.S. Coin Supply Chain,” accepted for publication by Production and Operations Management, studies strategies that could lessen problems in the supply chain such as doing away with the penny.

“In the paper, we look at things from the point of view of the federal reserve. The objective is to minimize total costs while providing coins to society. It costs about two cents to produce one penny. So we are losing money producing those coins,” he said.

Zhu pointed to retailers and consumers to be part of the solution. He noted the use of loyalty cards as a means of transferring remainders from purchases to be used at a later date, or simply asking customers to donate the extra pennies to local charities.

“It’s not a big deal to be short a penny, but if they start being short quarters customers might not be as happy. They should focus more on producing quarters and dimes especially during a time like this pandemic,” he said.

If those changes are not enough, Zhu made another suggestion.

“If your piggy bank is full, now would be a good time to start emptying them out,” he said.