Capacity Allocation Incorporating Market Equity Concerns: A Pharmaceutical Supply Chain Case Study

This work seeks to improve the efficiency of global pharmaceutical supply chains by proposing a capacity allocation model that includes an unfairness metric to balance the response to market needs with economic goals. A three-tier supply chain deterministic model is developed to include both the Net Present Value (NPV) and an unfairness metric that accounts for drug shortages. To ensure the validity of the proposed approach, the model was verified with data collected from a leading pharmaceutical company. Furthermore, results show the impact of equity concerns in product allocation, inventory, and investment in capacity decisions within the supply chain. The trade-off analysis between unfairness and NPV provides an important decision-support tool for evaluating different scenarios. The NPV of a fairer supply chain is significant, which proves the importance and feasibility of the proposed model.