Blood Supply Chains and Humanitarian Logistics

In my previous post, I pointed to a guest lecture on Disaster Communications, given in my Humanitarian Logistics and Healthcare class at the Isenberg School of Management, by "the other" Professor Nagurney, my husband.

My students also had the privilege of learning about blood supply chains last week, both from an operations management perspective, as well as from a design (or redesign) operations research one.

The guest speaker on blood supply chains was one of my advanced doctoral students, Amir H. Masoumi, with whom I have co-authored two papers on blood supply chains. Amir has also taught the required Management Science course for our Operations Management majors and was nominated for a university-wide teaching award by the students.

Amir's presentation, "Supply Chain Network Operations Management and Design of a Sustainable Blood Banking System," was based on the two papers with additional material added to broaden the scope for the students and to bring issues of disasters and humanitarian logistics into this context. The framework that we developed for this most important perishable product in healthcare handles risk as well as demand uncertainty.

Our paper, Supply Chain Network Operations Management of a Blood Banking System with Cost and Risk Minimization, Anna Nagurney, Amir H. Masoumi, and Min Yu, is now published online in the journal, Computational Management Science. Our paper, Supply Chain Network Design of a Sustainable Blood Banking System, Anna Nagurney and Amir H. Masoumi, is in press in the edited volume, Sustainable Supply Chains: Models, Methods and Public Policy Implications, T. Boone, V. Jayaraman, and R. Ganeshan, Editors, Springer, London, England, 2012. This book is in the International Series in Operations Research & Management Science.

The new course on Humanitarian Logistics and Healthcare has been a wonderful experience for the students, the instructor, as well as the guest speakers.

Sustainability of Transportation Networks by Including the Critical Human Element -- Commentary for Resources for the Future

I just heard from Resources for the Future (RFF) that my policy commentary, Designing Transportation Infrastructure to Include the Human Element, has been published.

It is also posted on the RFF homepage (and should reside there, I am told, for two weeks).

Resources for the Future is a Washington DC non-profit policy think tank, which focuses on environmental, energy, and natural resources issues. The invitation to contribute a piece came after my SAMSI presentation on Sustainability: Methodology with Applications in Raleigh, North Carolina in September.

In my commentary (with a nice graphic included, compliments of Resources for the Future), I also discuss the Braess paradox and several instances around the globe. The translation of the famous Braess paradox (1968) paper from German to English, which Tina Wakolbinger and I, together with Professor Braess did, is cited in the commentary as well as the preface to the article that I wrote with David E. Boyce (whom I recently had the pleasure of seeing in Miami at the Regional Science conference). Both the translation and the preface appeared in the INFORMS journal, Transportation Science.

With 7 billion people now on our planet and with the number of cars and other vehicles growing globally, there is a lot that we can and must do together to minimize not only congestion but also environmental emissions.

Designing a Sustainable Blood Banking Supply Chain Network

Interestingly, health care facilities in the United States are second only to the food industry in producing waste, generating more than 6,600 tons per day, and more than 4 billion pounds annually. In addition, considerable amounts of drugs have been found in 41 million Americans' drinking water due to the improper disposal of unused or expired drugs placed in domestic trash or discarded in the waste water. In other countries, up to 4 pounds of waste per hospital bed per day is produced, out of which 0.5 percent might be categorized as risky / potentially hazardous waste.

Medical waste, also known as clinical waste, refers to the waste products that can not be considered as general waste, and that is produced, typically, at health care premises, including hospitals, clinics, and labs. Due to the potentially hazardous nature of medical waste, both the American Dental Association (ADA) and the Centers for Disease Control (CDC) recommend that medical waste be removed in accordance with regulations.

Disposal of medical waste is not only costly to the health care industry, but also may harm the environment. Consequently, poor management of such waste may lead to the contamination of water, the soil, and the atmosphere. While many hospitals choose to have their waste burned so as to avoid polluting the soil through landfills, the incinerators themselves are one of the nation's leading sources of toxic pollutants such as dioxins and mercury. Thus, minimizing the amount of medical waste throughout the health care supply chains will lead to a cleaner environment, which may, in turn, also reduce illnesses and death.

When it comes to blood supply chains, the scarcity and vitalness of this highly perishable health care product make such supply chains crucial. Hence, the effective design and control of such systems can support the health and well-being of populations and can also positively affect the sustainability of the environment by reducing the associated waste. Indeed, since blood waste is a significant hazard to the environment, a major step in attaining a sustainable blood supply chain is to be able to minimize the outdating of blood products while satisfying the demand.

In our paper, "Supply Chain Network Design of a Sustainable Blood Banking System," Anna Nagurney and Amir H. Masoumi, we developed a multicriteria system-optimization framework for the supply chain network design of a sustainable blood banking system. The framework allows for the simultaneous determination of optimal link capacities through investments, and the flows on various links, which correspond to such application-based supply chain network activities as: blood collection, the shipment of collected blood, its testing and processing, its storage, its shipment to distribution centers, and, finally, to the points of demand. The system-optimization approach is believed to be mandated for critical supplies in that the demand for such products must be satisfied as closely as possible at minimal total cost. The use of a profit maximization criterion is not appropriate for an organization such as, for example, the American Red Cross, due to its non-profit status.

In particular, the sustainable supply chain network design model for blood banking that we developed is novel for several reasons:

1. it captures the perishability of the product through the use of arc multipliers;
2. it handles the costs associated with the discarding of the medical waste, which could be hazardous,
3. it captures the uncertainty associated with the demand for the product along with the risk associated with procurement of the product, and
4. it allows for total cost minimization and the total risk minimization associated with the design and operation of the blood banking supply chain network.

Our framework is a contribution to the growing literature on sustainable supply chains and to the design of sustainable supply chains, in particular (cf. Nagurney and Nagurney (2010) and the references therein). However, our supply chain network design model for sustainable blood systems focuses not on the minimization of emissions but rather on the minimization of waste. Moreover, it captures the perishability of this product.

We thank the Red Cross for helpful discussions conducted by Amir H. Masoumi as we conducted this research.

Our paper is now in press in the Springer International Series in Operations Research & Management Science, entitled: Sustainable Supply Chains: Models, Methods and Public Policy Implications, T. Boone, V. Jayaraman, and R. Ganeshan.

Let's Build a Resilient Network Economy Through an Infrastructure Bank and Analytics

How far does our critical infrastructure have to crumble before we will take concerted, systemic action?

How many disasters do we have to observe and experience, from both near and far, before we move forward?

How many opportunities will we continue to miss in moving our people and goods more efficiently, in cleaning up our air and waterways, and in building the schools and health care resources that our citizens need and deserve?

How long do we wait before the latest research on network resiliency gets put into practice?

How many more people need to lose their jobs before we, as a country, move forward in a significant, constructive, and measurable way?

There is promise on the horizon.

In an editorial, published in today's New York Times, there is bipartisan support, led by Senators John Kerry, Democrat of Massachusetts, Kay Bailey Hutchison, Republican of Texas, and Mark Warner, Democrat of Virginia, to establish an infrastructure bank. According to the editorial: The bank would lend money to build big-ticket transportation, water and energy projects that have a clear public benefit. The loans, or loan guarantees, would be designed to attract private capital as well. In fact, at least half a project’s financing would have to come from the private sector. As much as $640 billion could be leveraged this way over the next decade, proponents say.

It is time for the United States of America to lead in creation of an economy through a critical infrastructure that is an example for all the world! And in doing so, let us take advantage of the latest research on network design, risk management, sustainability, through analytics, so that we repair what needs to be repaired; build what needs to be built and where, and create lasting jobs for a brighter and safer future for all!

And remember, let's acknowledge system risk and financial networks, this time around!

Supply Chain Network Design and Redesign, Game Theory, and Nash Equilibria

There is a wonderful interview (but too short) by Ron Howard, the Director of the Academy Award winning movie, "A Beautiful Mind," with John F. Nash Jr., the 1994 Nobel laureate in Economic Sciences, in a trailer that accompanies the DVD of this movie. I had the pleasure of recently seeing both.

As John Nash walks away at the end of the interview, bundled up in a warm overcoat and knit cap, he ruefully comments that he has lost so many years and he needs to get back to research since that is what matters.

John Nash's contributions to game theory earned him the Nobel Prize. His work has influenced numerous disciplines, in addition to economics, notably, operations research and management science, political science, applied mathematics, and computer science.

I cite Nash's classical (1950) and (1951) papers in many of my papers that deal with competition.

For example, in a paper, "Supply Chain Network Design Under Profit Maximization and Oligopolistic Competition," which was published recently in the journal, Transportation Research E (2010), I devised a model in which firms seek to determine their optimal supply chain network designs in terms of manufacturing, storage, and shipment capacities, as well as product flows so as to maximize profits. The governing concept is that of a Nash - Cournot equilibrium. This model extends my earlier model in which a firm seeks to design (or redesign) its supply chain network so as to minimize its total costs associated with capacity enhancements (even from scratch) as well as the operational costs. In the latter, no competition was assumed. That study, "Optimal Supply Chain Network Design and Redesign at Minimal Total Cost with Demand Satisfaction," is in press in the International Journal of Production Economics.

High tech companies, including Samsung, Hewlett Packard, and IBM, as well as apparel companies from Benetton to Zara well understand the competitive advantages of careful cost control in supply chains. In addition, more and more companies, including Frito-Lay, Tesco, P&G, and Colgate are being recognized for their supply chain performance.

The analytical challenges of identifying not only the optimal capacities associated with various supply chain network activities, coupled with the optimal production quantities, storage volumes, as well as shipments are tremendous, since the possibilities of where to site manufacturing plants and distribution centers, for example, and at which capacities, may be great. Furthermore, the determination of the optimal supply chain network design (or redesign if a supply chain network already exists with some capacities) needs to be done in a rigorous manner that captures the system-wide nature of the problem.

I've also recently made use of the Nash equilibrium concept in devising a model to capture the gains of possible mergers and acquisitions of firms which are competitors. That paper, "Formulation and Analysis of Horizontal Mergers Among Oligopolistic Firms with Insights into the Merger Paradox: A Supply Chain Network Perspective," is in press in the journal Computational Management Science.

The algorithms that can be applied to determine the optimal designs of supply chain networks, operating either in a centralized manner or in a competitive, decentralized manner, are also reported in the above papers.

I agree with Nash that it is imperative to carve out the necessary time to do research.

Computational Management Science in Glorious Vienna

I am very much looking forward to the International Conference on Computational Management Science that will take place in Vienna, Austria later this month. Vienna is a center of scholarship, culture, architecture, music, and intrigue.

The last time that I was in Vienna was back in March 2009 when I spoke on Synergies and Vulnerabilities of Supply Chain Networks in a Global Economy at the Vienna University of Economics and Business Administration and was hosted by my esteemed and wonderful colleague there, Professor Manfred Fischer.

At the Computational Management Science (CMS) 2010 conference, which will be at the University of Vienna, I will be giving a keynote / plenary talk, entitled, Supply Chain Networks: Challenges and Opportunities from Analysis to Design, and the abstract is below.

Abstract: Supply chain networks provide the backbones for our economies since they involve the production, storage, and distribution of products as varied as vaccines and medicines, food, high tech products, automobiles, and even energy. Many of the supply chains today are global in nature and present challenging aspects for modeling and analysis. In this talk I will discuss different perspectives for supply chain modeling, analysis, and computation based on centralized vs. decentralized decision-making behavior, along with suitable methodological frameworks. I will also highlight applications to mergers and acquisitions and even humanitarian logistics through supply chain network integration. Such timely issues as risk management, demand uncertainty, outsourcing, and disruption management in the context of our recent research on supply chain network design and redesign will also be discussed. Suggestions for new directions and opportunities in healthcare and sustainable supply chain networks will conclude this talk.

I thank the organizers of CMS 2010 for giving me the opportunity to deliver this talk.

BP Oil Rig Environmental and Economic Disaster and Supply Chain Design

I returned recently from speaking at a workshop in Honolulu, Hawaii, where I heard from many locals of their outright physical pain and disgust at the growing oil spill from the Deepwater Horizon rig blowout in the Gulf of Mexico. I have refrained from writing about this disaster, with the explosion dating to April 20, 2010, until now, since, as many, I was hoping that, perhaps, the "top kill" approach might work to block the massive flow of oil spilling from this deepwater rig. It has not worked, which is another very serious setback.

Elisabeth Rosenthal writes in The New York Times, that already half a decade ago, David Eyton, who was then BP's Vice President for deepwater development in the Gulf, noted that: IF we’ve learned anything so far about the deepwater Gulf of Mexico, it is that it contains surprises. And that means an operator needs depth — depth in terms of resources and expertise — to create the capability to respond to the unexpected.

As a professor at the Isenberg School of Management, who is in the Department of Finance and Operations Management, it is clear to me that there was insufficient risk assessment conducted prior to this drilling endeavor. The potential benefits (think profits) were weighted more highly than any potential costs, including risks; not to even mention the potential adverse environmental impacts.

Companies must recognize the importance of corporate social responsibility and the negative externalities of their actions on citizens, on nature and the environment, and on a sustainable way of life. Ways of life of those who have labored hard and long, including the fishermen, in areas so adversely affected are being transformed for the foreseeable future. The anger and frustration are felt by us all.

The design of our supply chain networks so that environmental and risk issues are explicitly incorporated is essential. We, as faculty and students in business schools, need to collaborate across boundaries (disciplinary and professional ones) to provide tools that can assess the potential impacts of corporate actions.

In a week, the ALIO-INFORMS conference begins in Buenos Aires, Argentina. One of the talks that I will be presenting there is entitled: "Sustainable Supply Chain Network Design: A Multicriteria Perspective." The presentation has now been posted and is available for download (in pdf format).

This talk is based on the paper, with the same title, which is now in press in the journal, The International Journal of Sustainable Engineering. The paper captures, in a quantifiable way, multicriteria decision-making in supply chain design, which includes, for example, environmental impacts associated with different technologies.

As for other ways, in addition to solid research, that business school students and faculty can help with regards to this environmental and economic disaster, although we may be physically thousands of miles away, read this blog post.

It is clear that worse-case analysis was not addressed in the planning and construction of this deepwater oil rig in the Gulf of Mexico.

Speaking in Hawaii on Network Design

I am getting ready for the Workshop on Social Theory and Social Computing: Steps to Integration, which takes place next weekend in Honolulu, Hawaii. This workshop is sponsored by the Air Force Office of Scientific Research (AFOSR) and is the brainchild of Dr. Sun-Ki Chai of the University of Hawaii.

According to the workshop website:

The rise of the internet, both as a platform for social action and a rich source of social data, has turned computer science's focus increasingly to measuring, analyzing, and predicting social phenomena. However, the level of engagement between this work and the body of existing social science work leaves much to desired. While certain social science methodologies and formalisms have been adopted widely, social networks being by far the most notable, more disconnect is more generally noticeable than dialog and integration. By bringing together a group of prominent social scientists (themselves from different disciplines), computer scientists, and engineers who are studying similar kinds of social phenomena but generally do not move in the same academic circles, we hope to kick-start this interchange of ideas and to promote further interdisciplinary collaboration.

I am so honored to be an invited speaker at this workshop and am so looking forward to the presentations and intellectual exchanges.

My presentation is on: "Network Design -- From the Physical World to Virtual Worlds."

Abstract: In this talk, I will present recent research on the design of networks from different perspectives (centralized/cooperative vs. decentralized/competitive). The approach is sufficiently general to capture the network designer's multicriteria-decision-making behavior. I will illustrate how this theoretical and computational framework can be applied to physical networks, ranging from transportation to telecommunication ones, as well as to logistical ones (including supply chains). I will also discuss issues of redesign, as well as network integration, with applications as varied as corporate mergers and acquisitions and humanitarian logistics operations.

I will then overview how networks such as social and knowledge ones can also be subject to network design (and even be integrated with physical networks) and discuss the unique challenges of network design in virtual worlds.

More information about the workshop can be found here.

I have only been in Hawaii while being processed at the airport en route to/from Australia. Although I will be spending most of the time indoors at the workshop I hope to somehow absorb this state's beauty.

Supply Chain Network Design

My paper, Supply Chain Network Design Under Profit Maximization and Oligopolistic Competition, has now been officially published and it appears as the lead article in volume 46, number 3, of the journal Transportation Research E, pages 281-294.

The mathematical model that I developed in this paper can be applied to the design of supply chain networks where there is oligopolistic competition as in such industries as: freight carriers, airlines, certain beverage (including beer) manufacturers, oil companies, and wireless carriers, among others. The competitive formalism that I utilize is that of Nash equilibrium and I show that the governing equilibrium conditions can be formulated as a variational inequality. The algorithm that I propose and apply to compute the equilibrium product flows, along with the capacities on the various links, yields closed form expressions (very elegant and easy and fun to implement). For those who are interested, you can read up on this methodology in my Network Economics: A Variational Inequality Approach book.

I presented this work late last month at the Symposium on Transportation Network Design and Economics at Northwestern University, and the presentations given at this symposium have now been posted on the above link. My presentation is also available here.

This symposium was organized by the Transportation Center at Northwestern in honor of the visit of Professor Martin Beckmann and I blogged in an earlier posting on the great success of this symposium. Professor Hani S. Mahmassani is the Director of this Transportation Center and he, along with Professor David E. Boyce, were instrumental in getting this symposium organized and much of the success of it is due to them.

In the meantime, I received a lovely note from Professor Beckmann who wrote how much he enjoyed my fine paper. Needless to say, the fact that he took the time to write such a personal note is very meaningful to me.

What a Transportation Symposium!

I returned from Northwestern University early this morning after a landing on a delayed United flight from Chicago O'Hare to Bradley airport in Hartford/Springfield that was preceded by an announcement by the pilot that we will be experiencing "extreme turbulence." My trip began about 5:30AM Thursday morning when I was picked up by a van service in Amherst only to have the shuttle to which the other passengers and I were to then be moved to get a flat tire right in front of Mount Holyoke College in the dark of night. Luckily, our shuttle was still in good condition so we did a swap and arrived at the airport in time for our flights. Travel is never dull and especially in the midst of a frigid winter.

My destination was Northwestern University, where its Transportation Center, directed by Professor Hani S. Mahmassani, was hosting a Symposium on Transportation Network Design and Economics. The symposium was to mark the visit of Professor Martin Beckmann (who was on my doctoral committee at Brown University) and the complete symposium agenda can be found here.

The symposium was outstanding and brought together researchers in engineering, economics, operations research, regional science, and even physics. I especially appreciated the attention to detail in the organization of this symposium with sufficient time scheduled for many exciting discussions, wonderful coffee breaks, and a delicious free lunch. Professor Beckmann had arrived on Wednesday having traveled first from Providence to NYC, where he saw an opera and visited museums. He had taken an Amtrak sleeper car from NYC to Chicago (he believes in experiencing many different modes of transportation) and told us that the service was great but his sleeping compartment was rather cold. He is traveling back to Providence also on Amtrak (but through Washington DC).

Professors Mahmassani and David E. Boyce are to be congratulated as well as the staff of the Transportation Center at Northwestern for organizing an exceptional venue and very stimulating symposium program! The discussions that took place germinated numerous research questions and ideas on a topic of great relevance regionally, nationally, and globally. The audience included faculty, students, and practitioners. There were participants from Northwestern University, the University of Illinois at Urbana, the University of Illinois at Chicago, Purdue University, Roosevelt University, Loyola University, and UMass Amherst, as well as individuals from the Chicago Transportation Authority, Cambridge Systematics, the Chicago Metropolitan Agency for Planning, and several independent consultants.

The symposium was a perfect way in which to honor the lasting contributions of Professor Martin Beckmann to the economics and science of transportation networks! It was thrilling to, once again, see Professor Beckmann, who is 85 years old, and whose wit and brilliance still astound.

The photo above of Professor Beckmann with me was taken at the lovely dining hall at the Allen Center at the Kellogg School at Northwestern University on January 28, 2010.