Multi-echelon Network Optimization of Pharmaceutical Cold Chains

Maintaining product temperature at every point in the supply chain is very critical to ensure quality and stability of certain pharmaceutical raw material and products. Continuous temperature monitoring and recording is essential from quality, reporting and auditing standpoint. Furthermore, accuracy of the recorded data is extremely important for investigations. Information lost or transmission of inaccurate information can translate to significant monitory losses to parties involved in the supply chain, and in some cases may result in penalties to the manufacturer. Cost, for such temperature controlled and monitored supply chains (also known as cold chains), can be defined as a function of inventory and costs associated with information loss/inaccuracy. Consequently, managing cold chain costs is more challenging than managing traditional supply chain costs. In this paper, overall cost associated with different cold chain multi-echelon networks will be studied under stochastic demand and probabilistic information loss/accuracy conditions. Dynamic equations for each network are formulated and simulation based optimization is proposed to conduct the analysis.