Study on the Joint Government-Enterprise Stockpiling Strategy of Drugs in Shortage Considering Rotation Cycle

Cooperative government-enterprise stockpiling for drugs in shortage can reduce the inventory risks and cost constraints the government faces in independent stockpiling. Existing research, however, has not taken into account the rotation cycle and the decline in the value of the drugs that are stocked, which prevents its findings from being broadly applicable and extensible. Based on this, this study develops a government-led shortage stockpile model, establishes option contracts for government-enterprise cooperation in the supply chain system of drugs in short supply, and takes into account the features of medication impairment. We determine the requirements for government-enterprise collaboration and the best course of action for both parties by backward derivation, examine the impact of pertinent elements on the choice of the government enterprise and its cost-benefit and provide related management solutions. The study demonstrates that the joint government-enterprise stockpiling model of drugs in shortage based on options contracts can effectively increase the number of drug stockpiles and reduce the risk of government inventory while setting a reasonable rotation cycle based on the stability of drug value will effectively reduce the cost and loss of drug stockpiles and achieve win-win cooperation between government and enterprises