Recall management in pharmaceutical industry through supply chain coordination

Seyyed-Mahdi Hosseini-Motlagh (), Mona Jazinaninejad () and Nazanin Nami ()
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Seyyed-Mahdi Hosseini-Motlagh: Iran University of Science and Technology
Mona Jazinaninejad: Iran University of Science and Technology
Nazanin Nami: Iran University of Science and Technology

Annals of Operations Research, 2023, vol. 324, issue 1, No 39, 1183-1221

Abstract: Abstract This paper is motivated by a real pharmaceutical supply chain (PSC) of Valsartan, facing two major concerns. First, implementing effective policies for product recall management due to disruption occurring in the manufacturing process, including impurity in raw material and packaging errors. Second, determining the optimal selling price and quality of raw material affecting the quality of the final compound, Valsartan, due to the effect of these decisions on Valsartan demand. In this paper, we analytically evaluate the impacts of production disruption, defective products recall, and decentralization among the members on the performance of the multi-echelon PSC. Moreover, for the first time, we address the context of channel coordination as a risk-mitigating strategy in case of disruption occurrence by proposing an altered revenue-sharing contract. Therefore, decisions are analyzed comparing decentralized, centralized, and coordinated decision-making structures under a range of scenarios. The results reveal that the proposed coordination scheme not only shares the incurred costs by disruption occurrence among all members but also improves their profitability compared to that of the decentralized structure, which leads to implementing effective recall management.

Keywords: Supply chain coordination; Pharmaceutical supply chain; Game theory; Production disruption; Quality and price dependent demand; Altered revenue-sharing contract (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s10479-020-03720-7

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