Medicine distribution problem between pharmacy warehouse and pharmacies

Abstract

The pharmaceutical supply chain consists of supplier, distributor (pharmaceutical warehouses) and retail (pharmacists) stages. Since the costs of some pharmaceuticals are high while their shelf life is short, it is not possible for pharmacies to keep all kinds of drugs in their stocks. Instead, pharmacies maintain reasonable amounts of inventory for products with high demand, while fulfilling orders for those with low demand through pharmaceutical warehouses. In this study, the real life drug distribution problem of a pharmacy warehouse that meets demands of 186 pharmacies in 9 regions is addressed. Optimal distribution routes that minimize both the transportation time and the costs are obtained by using our two-stage optimization approach without changing the company's infrastructure. At first, the multiple traveling salesman method, which is an extension of the traveling salesman problem, is used to determine the optimal routes. In the second stage, the system is simulated to determine the most suitable travel frequencies and the savings in the number of vehicles used. The results show that, savings of 52% in vehicles used and 46% in distance traveled per day can be obtained if the developed model is applied.