Multi-echelon network optimization of pharmaceutical cold chains: a simulation study

To ensure quality of pharmaceutical raw materials and products it is very important to monitor specific factors throughout supply chain. In cold chains, temperature is closely controlled and monitored. Furthermore, it is critical to retain all associated information artifacts from a reporting, inspection and auditing standpoint. Loss in information can translate to significant monitory losses to parties involved. Consequently, cost not only includes all traditional supply chain costs, but also contains costs associated with penalties due to information loss/inaccuracy. Therefore, managing pharmaceutical cold chain costs is more challenging than managing traditional supply chain costs. This paper studies a typical cold chain and costs associated with a typical multi-echelon network under stochastic demand and probabilistic information handoff conditions. Dynamic equations are developed for individual nodes. A DOE is also proposed to understand sensitivity of key factors on costs. A simulation based optimization approach is adopted for the study.