Article ID: | iaor20112884 |
Volume: | 211 |
Issue: | 3 |
Start Page Number: | 496 |
End Page Number: | 506 |
Publication Date: | Jun 2011 |
Journal: | European Journal of Operational Research |
Authors: | Zhao Yao, Fleischhacker Adam J |
Keywords: | supply & supply chains, risk |
This paper examines the optimal production lot size decisions for clinical trial supply chains. One unique aspect of clinical trial supply chains is the risk of failure, meaning that the investigational drug is proven unsafe or ineffective during human testing and the trial is halted. Upon failure, any unused inventory is essentially wasted and needs to be destroyed. To avoid waste, manufacturers could produce small lot sizes. However, high production setup costs lead manufacturers to opt for large lot sizes and few setups. To optimally balance this tradeoff of waste and destruction versus production inefficiency, this paper generalizes the Wagner–Whitin model (