A blood bank network design problem with ıntegrated facility location, ınventory and routing decisions

Abstract

We aim to design an effective supply chain network for a blood distribution system to satisfy the needs of hospitals in a certain region. In the analyzed current system, each hospital keeps a certain level of inventory, received at certain time periods by the shipments from a main blood bank. We propose an alternative system, in which some of the hospitals are selected as local blood banks (LBB) and all other hospitals will be assigned to an LBB. More frequent shipments will be made from LBBs to these hospitals, leading to lower inventory levels to be kept at each hospital. The inventories kept separately at the hospitals in the current system will be pooled at the selected LBBs in the proposed system. We develop a mixed integer nonlinear programming (MINLP) model to determine the optimal selection of LBBs, assignment of hospitals to LBBs, optimal inventory levels at each LBB and routing decisions among the facilities in order to minimize total system costs. We also propose a piecewise linear approximation method and a simulated annealing heuristic approach to find the solution of this problem. The proposed model and the solution techniques are applied on a real life case study for the blood distribution network in Istanbul. It is observed that significant improvements can be obtained by the proposed system when compared to the current design. Performances of the solution methods are also compared and a sensitivity analysis related to system parameters is presented via detailed numerical experiments.