Planning in pharmaceutical supply chains with outsourcing and new product introductions

Abstract

High product turnover is crucial to the continued economic survival and growth of a pharmaceutical company. An issue that relates to this and that a pharmaceutical plant site repeatedly needs to resolve is whether it can or should undertake the production of a new intermediate or product or whether it should outsource some tasks to enable it to do so. Although some works exist in the literature on product pipeline management in the pharmaceutical industry, there is little work that addresses the above problem at the level of plant production. In this paper, we present a multiperiod, continuous-time, mixed-integer linear programming model that addresses this important problem for pharmaceutical plants using multiple parallel production lines in campaign mode and producing products with multiple intermediates. Given a set of due dates, demands for products at these due dates, and several operating and cleaning requirements, the aim is to determine the optimal production levels of various intermediates (new and old) or the optimal outsourcing policy to maximize the overall gross profit for the plant, while considering in detail the sequencing and timing of campaigns and material inventories. We present three examples to illustrate the effects of new product introductions on plant production plans, the benefits of outsourcing, and the ability of the new approach to react to sudden plant/demand changes.