Optimal purchase of two-itemized drugs for a disease

Lan C-H () and Chen C-C
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Lan C-H: Nanhua University
Chen C-C: Nanhua University

Journal of the Operational Research Society, 2007, vol. 58, issue 3, 309-316

Abstract: Abstract This paper submits a mathematical model called the two-itemized drugs purchasing decision (TDPD) model to conduct the optimal purchase of two-itemized drugs for healing a given disease. This TDPD model considers not only the annual estimated number of patients suffering from the given disease, the treatment courses, and the unit profit of each drug, but also the strength of the patient's perception on treatment quality, the different purchasing price of each drug with quantity discounts, the ordering cost, the holding cost, and other related costs to determine the optimal order quantity of each drug for achieving the maximum profit. A computerized solving program proposed in this paper applies tabu search technique as the main program and the all-units quantity discounts for economic order quantity as the sub-program to solve such a combinatorial problem, as well as perform sensitivity analyses on the changes by the strength of the patient's perception on treatment quality and the changes of annual estimated number of patients for the given disease. Two drugs, Lipitor and Gemnpid, to heal a disease ‘Hyperlipidaemia’ are considered as a case example in this study. This paper contributes a prototype quantitative method of purchasing decision for a given disease to a decision-maker with profound insights.

Keywords: quantity discounts; perception; tabu search; sensitivity analyses (search for similar items in EconPapers)
Date: 2007
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DOI: 10.1057/palgrave.jors.2602145

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