Abstract
Motivated by challenges faced by a biopharmaceutical firm, we extend the traditional process flexibility modeling literature by integrating inventory storage capabilities into these models, and develop general guidelines on how to design an effective supply chain network in this setting. Given the expense of inventory storage in the biopharmaceutical industry, the firm is considering incorporating flexible plants that can produce multiple types of product into their current dedicated supply chain in order to better respond to demand uncertainty while limiting the need for inventory. We develop models leading to insights for related strategic questions, including whether or not a new plant should be flexible, and whether and which plants should be modified to include inventory storage capabilities.
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