Mergers and Acquisitions in Blood Banking Systems: A Supply Chain Network Approach

Abstract

In this paper, we develop a methodological framework for the quantifiable assessment of total cost efficiency (synergy) associated with a merger or acquisition in the blood banking industry, which is experiencing a volatile environment, as well as measures capturing the expected supply shortage and surplus. The network optimization pre- and post-merger models handle perishability of the life-saving product of blood, include both operational and discarding costs of waste, capture the uncertainty associated with the demand points, as well as the expected total blood supply shortage cost and the total discarding cost at demand points. The models incorporate capacities on the links and their solution yields the optimal link flows plus frequencies of activities associated with blood collection, shipment, testing and processing, storage, and distribution. The proposed computational procedure is then applied to a large-scale example inspired by a pending merger in the real-world in both status quo and disaster scenarios to demonstrate the generality of the framework.

Keywords: blood banking, supply chains, mergers and acquisitions, efficiency measures, perishable product