Pharmaceuticals supplier selection and order allocation problem

Existing models supporting this problem generally assume that the weight of criterion used in the multi-criteria decision making model is constant. However, weight of criterion should vary in accordance with the value or importance of the product considered, this is particularly important in the healthcare industry where the criticality of pharmaceuticals should be considered in decision making. Moreover, there are very few models which consider the integrated problem of supplier selection and order allocation under volume discount with the consideration of variable weight for criterion. Hence, the research group aims at developing a mathematical model which can be used as a decision aid by health care supply chain manager in solving the supplier selection and order allocation problem.
Multiple suppliers with capacity constraints and business volume discount offers are considered in this supplier selection and order allocation problem. The objective is to determine the right supplier(s) and the right amount that should be procured from each supplier that minimizes the total cost of the supply chain (ordering, inventory holding, and transportation costs) while meeting the budget, service level, lead time and space constraints.
To this end, first a mathematical model that enables the decision maker to evaluate and rank suppliers based on multiple criteria will be developed. Then a second model that uses the output of the first model an input will answer the question of how much of each pharmaceutical product should be procured in a given planning horizon, and from which supplier should the health care facility get its products.

Figure: Supplier selection and order allocation problem for pharmaceutics in Ethiopia

This project is supported by the DAAD and the Ethiopian ministry of education.