Corporate social responsibility in the pharmaceutical supply chain: An optimized medicine donation scheme

Abstract

This paper investigates the coordination of a two-level pharmaceutical supply chain (PSC) consisting of a pharmacy and a pharma-supplier under corporate social responsibility (CSR) and uncertain demand. In this regard, the medicine donation scheme to the deprived areas and the take-back plan for collecting surplus medicine in the pharmacy site have been introduced to enhance public health and CSR performance in the proposed PSC. The pharma-supplier determines the donation amount at the start of the sale period. Subsequently, the pharmacy decides on the amount of medications order; afterward, the pharm-supplier makes a decision about take-back quantity at the specified time within the cycle. A customized revenue- and cost-sharing (CRCS) contract is also developed to coordinate the channel. Although deciding as a centralized entity optimizes the total profitability of the PSC, our findings reveal that it cannot guarantee the profitability of both channel members. Numerical investigations indicate that using the presented coordination scheme not only motivates the channel members to participate in the social/philanthropic activity but also mitigates pharmaceutical wastages and its potential losses. This finding means the proposed coordination mechanism can adjust the contract parameters in such a way that members have enough motivation to participate in channel optimal decision-making, and also ensure the profitability of both PSC members.