Design and performance evaluation of a healthcare distribution network towards maintaining a direct-to-customer policy

ABSTRACT

This work considers the multimodal distribution network of a healthcare company, where the stage of distributing to customers in a specific region is optimized. A time-evolving mixed-integer linear program is developed aimed at making tactical decisions; more specifically, to determine the best strategy for distributing the products from the manufacturing site (Mfg) to primary distribution centers (PDPs) and/or regional distribution centers (RDPs) and from them to customers. The company uses one Mfg and three different RDPs, and several PDPs. To account for variability in demand, the model is run under one-year actual data and the results are analyzed to obtain the best distribution scenario. The experiments show that the ratio of direct shipments can improve and demonstrate that cost reduction and modality improvement can be achieved within the network. An extensive sensitivity analysis is also conducted to show the effect of the model parameters on its performance.

KEYWORDS:

• Operations research (OR)
• supply chain
• logistics
• distribution network

Acknowledgments

The authors are grateful to anonymous referees for their constructive comments that have contributed to improving the article, and also to the managing editor for his editorial advice and support.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Notes on contributors

Ahmad Hosseini

Ahmad Hosseini is a senior research scientist in operation research (OR) at Umeå University, Sweden. He received his PhD degree in Industrial Engineering and his MSc degree in Applied Mathematics. His major research and teaching interests lie in the areas of operations research, logistics, and supply chain.

Sara Johansson

Sara Johansson is an ERP consultant at Accigo AB company, Sweden. She received her MSc in Industrial Engineering and Management, at Umeå University, Sweden 2016.

My Westberg

My Westberg is a supply chain junior management consult at ÅF company, Sweden. She received her MSc in Industrial Engineering and Management at Umeå University, Sweden 2016.