Supply chain coordination and influenza vaccination

Abstract

Annual influenza outbreaks incur great expenses in both human and monetary terms, and billions of dollars are being allocated for influenza pandemic preparedness in an attempt to avert even greater potential losses. Vaccination is a primary weapon for fighting influenza outbreaks. The influenza vaccine supply chain has characteristics that resemble the Newsvendor problem, but possesses several characteristics that distinguish it from many other supply chains. Differences include a nonlinear value of sales (caused by the nonlinear health benefits of vaccination that are due to infection dynamics) and vaccine production yield issues. In this thesis we present two models in the interface of operations and supply chain management and public health policy. In the first model, we focus on a supply chain with a government and a manufacturer. We show that production risks, taken currently by the vaccine manufacturer, lead to an insufficient supply of vaccine. Several supply contracts that coordinate buyer (governmental public health service) and supplier (vaccine manufacturer) incentives in many other industrial supply chains can not fully coordinate the influenza vaccine supply chain. We design a variant of the cost sharing contract and show that it provides incentives to both parties so that the supply chain achieves global optimization and hence improves the supply of vaccines. In the second mode, we consider the influenza vaccine supply chain with multiple countries.

(cont.) Each government purchases and administers vaccines in order to achieve an efficient cost-benefit tradeoff. Typically different countries have different economics sensitivities to public outcomes of infection and vaccination. It turns out that the initiating country, while having a significant role in the spread of the disease, does not receive enough vaccine stockpiles. Our model indicates that lack of coordination results in vaccine shortfalls in the most needed countries and vaccine excess in the regions where are not as effective, if the governments in the model act rationally. We show the role of contracts to modify monetary flows that purchase vaccination programs, and therefore modify infectious disease flows.