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Academic Journal of Engineering and Technology Science, 2020, 3(1); doi: 10.25236/AJETS.2020.030106.

Research on Medical Supply Chain Based on Disqualification Rate and Service Level

Author(s)

Mengli Hou*, Ruonan Zhang

Corresponding Author:
Mengli Hou
Affiliation(s)

College of Management, Shanghai University, Shanghai 200444, China
*Corresponding author e-mail: 13275543860@163.com

Abstract

The disqualification rate and service level of medical devices have an influence on consumer’s choice. High qualification rate and service level mean expensive costs to supply chain companies, which affects the profits of all companies in the supply chain eventually. The centralized decision-making is taken in this paper to guide the companies make appropriate decisions. The purpose of the former is to maximize the total utility of the society, while the latter is to maximize the profits of each enterprise. To our surprise, there is a saddle point, which means that the supply chain system reaches equilibrium at this point. Given the disqualification rate, we establish the function of profit to supplier and manufacturer. There is no maximum total profits of the society in the supply chain. However, the supply chain system reaches equilibrium at saddle point. The equilibrium point also plays an important role on decisions of companies in the supply chain. Additionally, we find that the relationship between selling price and disqualification rate is non-monotonic and complicated. The service level and disqualification rate are also non-linear. The total social profits can be obtained based on selling price and service level decided by manufacturer. Moreover, the service level is negative to punishment costs of disqualification rate. When the disqualification rate is small enough or large enough, the selling price is positive to the punishment costs due to unqualified products. Otherwise, the selling price is negative to the punishment costs. Eventually, some managerial implications are proposed to the companies and government in the supply chain.

Keywords

disqualification rate, service level, medical devices, centralized decision-making

Cite This Paper

Mengli Hou, Ruonan Zhang. Research on Medical Supply Chain Based on Disqualification Rate and Service Level. Academic Journal of Engineering and Technology Science (2020) Vol. 3 Issue 1: 40-45. https://doi.org/10.25236/AJETS.2020.030106.

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