A replenishment policy based on joint optimization in a downstream pharmaceutical supply chain: Centralized vs. decentralized replenishment

This paper considers a number of problems in a pharmaceutical downstream supply chain under specific constraints related to pharmaceutical products (e.g., their expiry date and regulations) and to inventory control (e.g., low prices of products, gift products or prices near zero, shortages prohibited but excess inventory allowed). As traditional models of inventory control and replenishment cannot optimize the total cost of the system, it is very important to consider the transportation cost as well. In this paper, we take into account some of these constraints and propose two models for multi-product replenishment policies, namely centralized and decentralized models. We seek to identify the best quantity and period of replenishment of products for a joint optimization of inventory and transportation costs. The proposed models can be applied to a specific family of products with a stable demand and high turnover rate, low prices (or gift products for some of them), and without any shortage. These two models are compared and the global approach is illustrated by a numerical example taken from a real-case study.