Supply chain network operations management of a blood banking system with cost and risk minimization

Blood service operations are a key component of the healthcare system all over the world and yet the modeling and the analysis of such systems from a complete supply chain network optimization perspective have been lacking due to their associated unique challenges. In this paper, we develop a generalized network optimization model for the complex supply chain of human blood, which is a life‐saving, perishable product. In particular, we consider a regionalized blood banking system consisting of collection sites, testing and processing facilities, storage facilities, distribution centers, as well as points of demand, which, typically, include hospitals. Our multicriteria system‐optimization approach on generalized networks with arc multipliers captures many of the critical issues associated with blood supply chains such as the determination of the optimal allocations, and the induced supply‐side risk, as well as the induced cost of discarding the waste, while satisfying the uncertain demands as closely as possible. The framework that we present is also applicable, with appropriate modifications, to the optimization of other supply chains of perishable products.