LAUSR

Abstract Drug shortage compromises patient safety and increases the vulnerability of the overall healthcare system. Improving patient service level in the pharmaceutical industry context is a major endeavor towards a socially responsible supply chain. However, service levels are difficult to achieve as the actors (i.e. distributors and retailers) within the pharmaceutical supply chain (PSC) tend to maximize their respective self-interests. This paper illustrates how one can coordinate the PSC with service level consideration through a multi-objective collaborative decision making model. A two-level PSC comprising one pharma-distributor and one pharma-retailer with stochastic demand sets the backdrop of the study. The pharma-distributor's visit interval determines the duration of the review period of the pharma-retailer's inventory policy. Specifically, this paper incorporates the visit interval and safety stock level into the trade-offs between the entire PSC profit and the service level under decentralized and centralized decision-making scenarios. The augmented e-constraint method is applied to obtain the Pareto optimal solutions and the trade-offs between the objectives are examined. The results suggest that all the PSC actors are individually better off under a multi-objective collaborative model that also improves the service level and profitability for the entire PSC.