BLOOD SUPPLY CHAIN

INTRODUCTION

The case presents the mission of collecting and processing blood to meet the needs and
requirements of the patients. It talks about Morocco which consists of 16 Regional Blood
Transfusion Centers (RBTC) which mainly deals in collection, processing and separation of
blood in order to obtain Labile Blood Products (LBP) and one National Blood Transfusion
and Hematology Centers (NBTHC). In the past many researchers have been done to optimize
the cost of flow of blood supply chain but this study used the game theory to optimize or
minimize this cost. Here hybridized game theory is used to form stable coalitions in order to
minimize the transport cost as much as possible. Various methods such as Mixed Integer
Linear Programming model, Vehicle Routing Problem with Pickup and Delivery Time
Window is adopted and introduced within each coalition to focus on the issue of solving the
problem of logistics.

NBTHC act as a link between different RBTC. If the situation of level stock available for the
delivery falls below the safety stock occurs, a procurement list of LBP is transmitted to
NBTHC. NBTHC also transmits LBP to the nearest centers with an extra stock in order to
ensure issue of deficit do not arrives. The main mission of NBTHC’s is to fulfill the blood
requirements of different patients. Thus the whole system of blood transfusion is made
centralized around the hematology center. In order to optimize the cost of transport and to
cater to needs of the patients in the best possible manner coalitions of RBTC is created and a
resolution of a Vehicle Routing Problem with Pickup and Delivery Time Window
(VRPPDTW) is also offered and proposed to further optimize the cost of transport.

The second section of this paper represents previous literature review, summary of the paper,
future research direction and the opinion of our group as a whole.
PREVIOUS LITERATURE REVIEWS

 Game Theory and Operations Research: Some Musings 50 Years Later

1. Martin Shubik
Yale University - School of Management; Yale University - Cowles
Foundation
Date Written: May 2001

Summary: The paper speaks about the the utilization of the methods of game theory in Operations
Research is given together with consideration for the future developments. The language and
analogies provided by game theory are now broadly accepted. It is suggested that the deep successes
of game theory have highlighted its limitations and have helped open up explorations in computer
science, behavioural economics and simulation where the limitations of intelligence and of data
processing are taken into account.

 Supplier coalitions in on-line reverse auctions: Validity requirements and profit

distribution scheme

2. MingzhouJin and S.Davidwu

Date Written: April 2006

Summary : This paper studies the formation of supplier coalitions in on-line reverse auctions. An
auction mechanism with supplier coalitions is proposed, which allows suppliers to form coalitions
with one another for the purpose of enhancing their profitability and providing them incentives to
participate in on-line reverse auctions. Basic requirements are identified for a valid coalition
mechanism, and the requirements include individual rationality, market efficiency compatibility,
maintaining competition, observability and controllability, and financial balance. The proposed
coalition mechanism is well defined and satisfies all validity requirements. The stable coalition
structure under this mechanism is also studied, and it is proved that under symmetric information
there exists one unique strongly stable coalition structure. The grand coalition usually does not form a
strongly stable coalition structure.

 An evaluation of activity-based costing and functional-based costing: A game-

theoretic approach

3. Shannon L. Charles and Don R. Hansen

Date Written: May 2008
Summary: This study develops a theoretical product cost framework independent of cost assignment
concepts. The framework is used in conjunction with cooperative game-theory concepts to develop
constructs for evaluating the accuracy of competing cost systems. Cooperative game theory provides
rational, non-arbitrary criteria for assigning joint benefits and defines two possible constructs; the set
of imputations and the core. Using these two constructs to define accuracy, along with an operational
measure of product diversity developed in the study, formal conditions are identified where activity-
based costing (ABC) is theoretically closer to the true product cost than functional-based costing
(FBC). Our results, therefore, provide a theoretical foundation for ABC.

 Coalition Stability in Assembly Models

4. Mahesh Nagarajan and Grey Sosic

Date Written : 13 Oct 2008

Summary: In this paper, they study dynamic supplier alliances in a decentralized assembly system.
They examine a supply chain in which n suppliers sell complementary components to a downstream
assembler, who faces a price-sensitive deterministic demand. They analyse alliance/coalition
formation between suppliers, using a two-stage approach. In Stage 1, suppliers form coalitions that
each agree to sell a kit of components to the assembler. In Stage 2, coalitions make wholesale price
decisions, whereas the assembler buys the components (kits) from the coalitions and sets the selling
price of the product. Stage 2 is modelled as a competitive game, in which the primary competition is
vertical (i.e., supplier coalitions compete against the downstream assembler), and the secondary
competition is horizontal, in that coalitions compete against each other. Here, they consider three
modes of competition—Supplier Stackelberg, Vertical Nash, and Assembler Stackelberg models—
that correspond to different power structures in the market. In Stage 1, they analyse the stability of
coalition structures. They assume that suppliers are farsighted, that is, each coalition considers the
possibility that once it acts, another coalition may react, and a third coalition might in turn react, and
so on. Using this framework, they predicted the structure of possible supplier alliances as a function
of the power structure in the market, the number of suppliers, and the structure of the demand.
SUMMARY OF THE RESEARCH PAPER

Researchers have been done to optimize different flows in blood supply chain. Work focus
on the case of Morocco, consisting of 16 Regional Blood Transfusion Centers (RBTC)
centralized around a National Blood Transfusion and Hematology Center (NBTHC). An
approach based on hybridized game theory is adopted to form core and strongly stable
coalitions and optimize as much as possible the transport cost. Collaborative supply chain of
blood, this study propose a new way to design a set of coalition in order to satisfy customer
demand and optimize transport cost in Less than Truck-Load transportation mode (LTL). A
linear integer program is formulated to generate the optimal costs of each of the 33 coalitions
approved by the Director of NBTHC.

Collaborative supply chain of blood, this study propose a new way to design a set of coalition
in order to satisfy customer demand and optimize transport cost in Less than Truck-Load
transportation mode (LTL). First, a linear integer program is formulated to generate the
optimal costs of each of the 33 coalitions approved by the Director of NBTHC. And then
these costs are used as data of two other MILP to determine which coalitions form to meet
the demands of patients and which combination will be core and strongly stable. A third
MILP is also introduced to optimize vehicle routing within each coalition. This model
minimizes the total cost of transport generated by fixed and variable costs associated to
vehicles. This model, rated as HVRPPDTW, take into account the heterogeneity of the fleet
and the self choice of tour starting point. Model validation was performed on a solver, and
showed the model’s relevance. Then the possibility of defining coalitions directly from this
MILP was evaluated.

This approach has achieved the desired objective, which is the satisfaction of demand while
optimizing the cost of transportation. A sizeable cost value of unmet requests was assigned to
make other transportation costs and unused bags negligible. This study was able to optimize
the procurement process and the end result was a set of self-sustaining coalitions. The
experiment results showed that the larger institutions reinforce the complexity of the model,
where the processing time becomes long. In addition, from a number of transfusion centers,
the computer and the software available cannot give effective results. To better understand
this issue of problem size, in a future study treatment via meta-heuristic; known for their
efficiency in solving time even for large instances; will be interesting.

Also, for better contribution in the context of this scientific research, an interface will be
created between the model and a map, taking into account the dynamics of routes
information.
FUTURE RESEARCH DIRECTION

Problem 1 -The experiments conducted in this particular study showed that large group of
institutions reinforced the use of complex model which hampered and delayed the processing
time.

Problem 2- the software and the computers available in the transfusion centers which is 15 in
this case was not able to give accurate and effective results.

Solution 1 - In the future study related to blood supply chain meta- heuristics can be used
which are known for their efficiency in solving time for even large samples or instances.

Solution 2- In the upcoming future researches an interface or link between the mathematical
models and map should be created by taking into account the dynamics related to route
information.

OUR OPINION

Game theory is a powerful methodology as it allows math modelling of interactions among

competing or cooperating decision makers who are faced with their own objectives and
constraints on resources. It captures competition for blood donation on supply side as well as
competition on business on demand side. The computer- based model includes capacities on
supply chain activities such as testing, storage & distribution. It also includes capacities
associated with number of available donors in different regions.

In order to minimize wastage at demand sites, lower & upper bounds on the volumes of
RBCs are allowed at each hospital demand point. Perishability is handled using multipliers to
capture how much blood may be lost due to , results from testing, as it moves down different
pathways from origin nodes to destination nodes.

The algorithmic solution yields optimal blood flow & the prices that should be charged for
cost recovery. The flexibility of the game theory model allows decision makers to evaluate
the impacts of a reduction or increase in donor availability & to determine the impacts on
blood flows & prices charged, as well as the prices incurred by competing blood service
organizations.

Also blood service organization is affected the most in presence of various supply chain
disruptions in terms of donor base due to a disease & disruptions to testing & storage
facilities in natural disaster. The evaluation of different possible scenarios enables blood
service organizations to be more prepared & resilient.

It also provides quantifiable measures for identification of possible synergies for blood
service organizations through alliances which results in cost reduction in operations and with
that of possible blood shortage & supply surpluses. They enable the most cost- effective
sharing of resources & making most of the available blood.