Distributors cost allocation

An observable advantage of purchasing excipients from a pharmaceutical excipient distributor is the ability of that distributor to consolidate the purchase of many excipients on behalf of the user. By this rationale, the distributor becomes an extension of the excipient user s sourcing and procurement departments. This presents obvious time-, resource-, and cost-saving opportunities to the user, because they can allocate their resources to other functions, while the distributor assembles all necessary documentation and executes all orders with the various excipient makers. 

The imsatisfied demands of retailers are backlogged by the distributor, and the imsatisfied demands of customers are considered as lost sales by the retailer. The distributor uses the two-phase allocation-rationing mechanism proposed in this study to distribute its on-hand inventory to the downstream members. The first phase of the mechanism is used when there are unsatisfied demands of the retailers up to the day of the last review of the distributor. The second phase of the mechanism is used when the leftover inventory available with the distributor (after the allocahon) is insufficient to meet the demands from retailers after the day of the last review of the distributor. The main objective of the supply chain is to minimize the TSCC while the maximizing customer satisfaction (measured in terms of the fill rate on a day). The TSCC is comprised of installahon-specific holding cost and penalty cost per unit of product sale lost by the retailer and of installation-specific... 

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