A study on healthcare-product supply chain with a group purchasing organization

Abstract

In order to better understand the impact of group purchasing organization (GPO) on healthcare-product supply chain, we build a supply chain model consisting of one manufacturer, one competitive source, one group purchasing organization(GPO) and n healthcare providers for a single product. Providers may purchase from any source for minimizing their total costs. Through considering different providers' demands, power schemes and revenue sharing between GPO and providers, we analyze the performance of supply chain and its members under various situations. Numerical examples show some interesting findings: (1) When GPO dominates the supply chain, GPO can obtain more profits. (2)When manufacturer dominates the supply chain and GPO shares its revenue with providers, there exists specific revenue sharing rates, which increase GPO's profits and reduce providers' cost; (3) Manufacturer always can achieve a same optimal profit by changing quantity discount rate when GPO dominates supply chain and shares its revenue with providers.