Optimizing Supplier Selection and Order Allocation for Medical Supplies: A Mixed Integer Linear Approach

Provisioning high-quality supplies in sufficient quantities is a top priority in healthcare supply chains. Thus, evaluating suppliers and allocating orders among them is essential, ensuring a balance between demand requirements and cost reduction. Supplier selection and order allocation (SSOA) in non-healthcare sectors has been widely adopted, while its implementation in healthcare is limited due to the unique requirements of the healthcare industry. This paper presents an optimization model for supplier selection of medical disposables that reduces the dependency on a sole supplier allowing the opportunity to allocate optimum quantities among multiple suppliers. We develop a Mixed Integer Linear Programming model considering multi-products, multi-periods, multi-centers and multi-suppliers of medical disposables. The model incorporates capacity, demand and quality constraints, along with risks associated with delays in delivery. Both single-sourcing and multi-sourcing options are analyzed to minimize total purchasing costs. The results indicate that adopting the multi-sourcing option to fulfill the demand results in a 13.3% reduction in the total cost compared to the single-sourcing option. Healthcare procurement managers can embrace the multi-sourcing model to enhance their supply chain and satisfy product demand.