Pharmaceutical supply chain networks with outsourcing under price and quality competition

Abstract

In this paper, we present a pharmaceutical supply chain network model with outsourcing under price and quality competition, in both equilibrium and dynamic versions. We consider a pharmaceutical firm that is engaged in determining the optimal pharmaceutical flows associated with its supply chain network activities in the form of manufacturing and distribution. In addition to multimarket demand satisfaction, the pharmaceutical firm seeks to minimize its total cost, with the associated function also capturing the firm's weighted disrepute cost caused by possible quality issues associated with the contractors. Simultaneously, the contractors, who compete with one another noncooperatively in prices in the manner of Bertrand, and in quality, seek to secure manufacturing and distribution of the pharmaceutical product from the pharmaceutical firm. This game theory model allows for the determination of the optimal pharmaceutical product flows associated with the supply chain in-house and outsourcing network activities and provides the pharmaceutical firm with its optimal make-or-buy decisions and the optimal contractor selections. We state the governing equilibrium conditions and derive the equivalent variational inequality formulation. We then propose dynamic adjustment processes for the evolution of the product flows, the quality levels, and the prices, along with stability analysis results. The algorithm yields a discretization of the continuous-time adjustment processes. We present convergence results and compute solutions to numerical examples to illustrate the generality and applicability of the framework.

A Network Economic Game Theory Model of a Service-Oriented Internet with Price and Quality Competition in Both Content and Network Provision

“…A game theory model of service providers (CPs and NPs) is then constructed and analyzed in §3 to show the competitive behavior of content and network providers in prices and quality of services and their interactions with the users at the demand markets. This model extends the work of Nagurney et al (2013a) and Nagurney and Wolf (2014) in that quality of both content and of network provision is captured. In addition, we allow for side payments and utilize direct demand functions (rather than their inverses).…”

Pharmaceutical cold chain and novel technological tools: a systematic review

“…Outsourcing (Nagurney et al, 2013;Tremblay, 2013) Direct Distribu on (Aguas et al, 2016;. Kulkarni and Niranjan, 2013;Wang et al, 2013) Indirect Distribu on (Kanavos et al, 2011) (Kelle et al, 2012;Susarla and Karimi, 2011;Baboli et al, 2011;Masoumi et al, 2012) Selec ve Distribu ve Channel ( RosseU et al 2011;McCabe et al,2011)(Zimmerman, 2011) Ven la on (Song et al, 2014) Pricing and expenditures (P-P&E) Pricing mechanisms (Heiskanen et al, 2015;Bertoldi et al, 2012) Pricing and Availability (Göllü, 2017 ;Goncharuk and Getman, 2014) Decision making for expenses (Narayana et al, 2012;Pharmerging, 2013) Pricing Affec ng medical expenses (Asamoah et al, 2012;Taylor, 2010) Stocking (P-Stk)…”

Price Cap Models in Pharmaceutical Online-to-Offline Supply Chains

“…A. Nagurney and L. S. Nagurney [25] built an easy-to-handle network model and computation method for a medical supply chain. Nagurney et al [26] studied a pharmaceutical supply chain equilibrium and dynamic network model considering outsourcing, price, and quality competition to find the optimal pharmaceutical logistics that minimizes the total cost. Based on the reality of drug distribution in Europe and the United States, the existing research has studied the design of drug distribution network from the perspective of pharmaceutical companies but not from the perspective of collection and distribution of drug distributors.…”