Group purchasing organization design: a clustering approach

Abstract

Supply chain management is monitoring of activities involved in supply chain, for integrating and coordinating between suppliers, manufacturing, inventory and transportation both within and among members. The ultimate aim of supply chains is to reduce costs and increase market coverage. Procuring and purchasing requested items in a timely manner are the two most important issues for supply chain stockholders. Group purchasing is one of the purchasing strategies in supply chains. It offers great potential by ordering large volumes to decrease expenses which can increase services to customers. A clustering optimization approach is employed to model group purchasing for a set of pharmacies in the field of healthcare. The proposed model determines a cooperation strategy based on factors such as distance between pharmacies and procurement expenditure in this network. Moreover, the proposed multi-objective group purchasing model is optimized using both goal programming and non-dominated sorting genetic algorithm. To illustrate the application of the proposed model, designing a purchasing group organization for Chalus city pharmacies is investigated. Purchasing groups are established in the way that sum of pharmacies ordering quantity has been located in the second or the third level of discount rate. Thus, the results show that GPOs can take the advantage of this cooperation.