A dynamics approach for modeling inventory fluctuations of the pharmaceutical supply chain in covid 19 pandemic

Subject Areas : Executive Management

Parvaneh  Tavakol ¹ (Department of Industrial Management, Bandar-e- Anzali International Branch, Islamic Azad University, Bandar-e-Anzali, Iran)
Bijan  Nahavandi ² (Department of Industrial Management, Science and Research Branch, Islamic Azad University, Tehran, Iran)
Mahdi  Homayounfar ³ (Department of Industrial Management, Rasht Branch, Islamic Azad University, Rasht, Iran)

Received: 2022-08-25 Accepted : 2023-02-19 Published : 2023-06-01

Keywords: Supply Chain, Bullwhip Effect, System Dynamics, Inventory management,

Abstract :

Considering the importance of inventory management in the pharmaceutical industry, especially during the Covid-19 pandemic, this paper investigates a five-echelon pharmaceutical supply chain including component suppliers, manufacturers, retailers, distributors and consumers in order to identify various variables of the inventory management systems and analyze their behavior. Conducting the research, first, based on the reviewing the literature, 29 drivers of bullwhip effect (BWE) in supply chain were extracted. Next, systems dynamics as a powerful approach for modeling complex systems, especially supply chains, is applied to simulate the dynamics of the pharmaceutical supply chain. So, the interactions of the main variables of the system were translated to the dynamic hypotheses and constitute the causal loop diagram. Then, stock and flow diagram was formulated in form of the differential equations. To validate the proposed model, some structural and behavioral validation test were implemented which indicated model’s accuracy. Finally, 4 potential scenarios based on the extent of improvement in information quality, safety stock and lead time were developed and manipulated to analyze their effects on inventory gap, as the main indicator of BWE. The results indicate that the best scenario for the component supplier and manufacturer is 5% increase in the information quality, 10% increase in the safety reserve and 5% decrease in lead time. While for the medicine distributor and medicine retailer; 5% increase in information quality, 5% increase in the safety reserve and 10% reduction in lead time, minimizes stock gap in the shortest time.

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