Multitiered blood supply chain network competition: Linking blood service organizations, hospitals, and payers

In this paper, we present a multitiered competitive supply chain network model for the blood banking industry, with a focus on the United States, that captures the economic interactions between three tiers of stakeholders; namely, the blood service organizations, the hospitals or medical centers, which transfuse blood to patients, and the payer groups that patients belong to. In addition, the supply chain framework for this life-saving product includes the competition among blood service organizations and their various supply chain activities. We model the behavior of each category of stakeholder and use the theory of variational inequalities to derive the equilibrium conditions for the entire supply chain. Illustrative examples are provided, along with qualitative properties, followed by an algorithm, accompanied by convergence results, that is used to solve simulated numerical examples. Results from these examples demonstrate that such a model can be effectively used to determine the prices and blood pathways from blood service organizations to hospitals to payers.