Pulling Drugs along the Supply Chain: Centralization of Hospitals' Inventory

Abstract

Due to the economic crisis and the predominance of drug expenditure in healthcare costs, the cooperation of groups of hospitals to negotiate with suppliers and centralize warehouses has been a recent trend in the pharmaceutical supply chain. This paper shows the economic convenience of centralizing the hospitals' inventory decisions (how much/when to order) based on the sharing of medical prescriptions of patients along the supply chain. The logistic network under investigation (TO BE model) integrates: a central pharmacy negotiating with suppliers, collecting hospital orders, storing and distributing materials; a number of hospitals feeding their medical units with materials; and a number of medical units taking care of their patients. The study is carried out comparing the cost performances of the proposed model with a non-cooperative one(in which hospitals manage their stocks individually) by means of simulation.