Coordination of Quantity Discount Contracts With Group Purchasing Organizations and Demand Information Sharing in Pharmaceutical Supply Chains

The double-marginal and bullwhip effects caused by information asymmetry are common in the actual operation of pharmaceutical supply chains. Introducing pharmaceutical group purchasing organizations (GPOs) increases the risk of these effects, leading to decision-making failures and reduced operational efficiency in pharmaceutical supply chains. This study addresses these issues by proposing a quantity discount contract coordination model that includes GPOs and incorporates demand information sharing. This model is solved and simulated using a Steinberg game and the inverse induction method. The results show that under certain conditions, demand information sharing increases the demand of each supply chain member and the revenue of pharmaceutical GPOs. However, quantity discount contracts increase the revenue of medical institutions and decrease their procurement costs. Collectively, these effects can reduce the procurement costs of medical institutions and pharmaceutical purchasers, thus enabling the coordinated operation of the pharmaceutical supply chain. These findings reveal potential cost-saving approaches for medical institutions and pharmaceutical purchasers, which are of great significance for promoting the sustainable development of the medical industry. However, the model construction in this study has limitations, and future research could further explore the influence of combination contracts on supply chain coordination

Bullwhip effect · Information asymmetry · Information sharing · Pharmaceutical industry · Procurement · Purchasing · Revenue sharing · Supply chain · Supply chain management · Pharmaceutical Economics and Policy · Public Procurement and Policy · Supply Chain and Inventory Management