Research On Pharmaceutical Supply Chain Order Management Under VMI

In the 21st century,with rapid development of market economy,the long-term and harmony development of medical products supply chain is facing fierce competition.Supply chain members’ decisions not only affect the competitiveness of the entire supply chain,but also have a significant impact on people’s normal healthy life.However,most of the researches on the pharmaceutical supply chain focus on the management of hospital pharmacy inventory.With the development of behavioral economics and advanced information technology,members of the pharmaceutical supply chain are increasingly trying to be a whole,seeking cooperation in a coordinated mechanism and trying a variety of management methods to operate the supply chain.Therefore,the methods such as literature research,case study,mathematical modeling and mathematical simulation are used to analyze the supply chain order management of Medicine based on VMI,revenue sharing contract and order remaining transfer contract.After a comprehensive review on the literature of pharmaceutical supply chain and supply chain coordination mechanism,medical products circulation mode of American,Japan and Singapore and its inventory management mechanism are analyzed specifically,then summarized to successful experiences.On the basis of the analysis of Chinese circulation patterns,"vendor managed inventory" is recognized as a great circulation pattern considering the national conditions and developing trends.Then,consider the influence of revenue sharing mechanism and order remaining transshipment strategy on supply chain order decision.Based on the general medicine supply chain in China and vendor managed inventory,we assume that inventory excess and inventory shortage are in charged by pharmaceutical wholesaler but not pharmaceutical retailers.Then structure the expected profit model of each member in the supply chain under non VMI and VMI.By solving the optimal expected profit and simulating examples,we determine whether to use the order decision under VMI.After the implementation of VMI,the expected profits of each member will not always be increased.Besides,the expected profits of the members cannot be improved when the wholesale price is less or even close to the cost.The inventory management method of supply chain is failed,and the order decision under VMI should be avoid.The profits of each member could be promoted when wholesale prices even closer to the retail price and the members of supply chain are willing to participate in the order decision under VMI.The overall profit of the system gradually trend to coordination with the increase of the wholesale price.The uncertainty of the wholesale price becomes a baffle of the implementation of the order decision under VMI.Two coordination mechanisms of supply chain are constructed based on revenue sharing contract and order remaining transfer contract.The influence of the expected profit of supply chain and order decision could be analyzed by simulating examples.Pharmaceutical retailers are bound to suffer losses and pharmaceutical wholesalers will be benefited after the implementation of revenue sharing.It is obviously that neither of them can achieve mutual coordination.Besides,the optimal expected profit stability of the whole supply chain is greatly improved under the new order decision,and it is propitious to promote the steady development of social economy.The optimal expected profit for each member and the whole could get improved by order remaining transfer contract.Though advantages for retailers will be weaken when the wholesale price is too high,and it is the same as no system coordination when the transfer cost reaches the critical maximum.As a result,revenue sharing ratio and order remaining transfer cost should be controlled reasonably and the order decision also should be made reasonably to avoid losing its supply chain competitiveness.The results of research,the deficiency and improvement of the paper and future research directions are discussed in the final.