Two studies on improving the efficiency of vaccine supply chain

Abstract

Worldwide, annual epidemic like influenza results in millions severe illnesses. However, the coverage of vaccine, which is the most effective way to prevent infections, is undesirably low. The vaccination coverage changes every flu-season, and is determined by the minimum of supply and demand. Previous research on vaccination coverage mainly focuses on single-period models and the supply shortage. In this thesis, we study the vaccine supply chain under multi-period models, where we denote each period as one flu season for simplicity, and explore the demand uncertainty. We conduct two studies on the inefficiency of a vaccine supply chain, i.e., the low vaccination coverage, taking account of multi-period vaccine market and consumer vaccination regret, respectively. In the first study, we construct a multi-period vaccine demand model to study multi-period vaccine supply decisions and government interventions. We assume that members of the public make vaccination decisions at the beginning of a flu season, given the situation of the last flu season. Both the manufacturer and government will make multi-period decisions. We formulate the problem, characterize the solution properties, and derive the multi-period profit-maximizing coverage and multi-period socially optimal coverage. In addition, we show that, besides supply uncertainty, vaccine demand decreases or increases with the vaccination coverage in the last flu season, depending on vaccine effectiveness. Furthermore, the coverage convergence depends on vaccine effectiveness and infection cost distribution. Accordingly, the multi-period profit-maximizing coverage and multi-period socially optimal coverage depend on the vaccine effectiveness and coverage convergence. We also conduct numerical experiments to generate practical implications of the analytical findings. Our results provide management insights on vaccine supply decisions, government interventions and vaccination coverage. In the second study, we formulate a single-period vaccine demand model incorporating the free rider behavior and customer regret. Solving the model, we show that, as the coefficient of customer regret increases, more people would like to be free riders, which affects the vaccine market coordination. When the coefficient of customer regret is large enough, there will be no risk-taking customers under the socially optimal vaccination coverage. Extending the model to include incomplete demand information and oligopolistic supply, we find that both inaccurate estimation of customer regret and incomplete supply competition will lead to imbalance of supply and demand. Finally, considering government's subsidy allocations on both supply and demand sides, we present a subsidy allocation mechanism to help the market achieve the largest equilibrium coverage.