Implement a Two-Tier Donation Approach to Optimize the Humanitarian Pharmaceutical Inventory by Employing a Collaborative Decision-Making

This study explores the coordination of a three-echelon Humanitarian Pharmaceutical Supply Chain (HPSC) involving a Pharmaceutical Company (PC), a Local Humanitarian Logistic Provider (LHLP), and a Regional Humanitarian Logistic Provider (RHLP) with a focus on economic objectives and the challenges posed by uncertain demand. In this regard, a two-tier donation scheme is introduced to optimize the humanitarian inventory and to preserve the environmental and economic aspects of the HPSC. At the beginning of the distribution period, the PC establishes the donation quantity. Afterwards, the LHLP determines the quantity of medications to be ordered. Subsequently, at the specified time within the cycle, the RHLP decides regarding the quantity to be taken back. Then, the PC will retrieve the donation quantity from the returned quantity. To effectively coordinate the HPSC, a bi-level optimization scheme is developed. The numerical results demonstrate that implementing the proposed bi-level optimization collaborative scheme not only enhances total channel profit but also encourages all members to make decisions in line with integrated sustainable HPSC goals.