A game theoretic approach for pricing of red blood cells under supply and demand uncertainty and government role

The growing global population and reduced blood donations due to COVID-19 necessitate efficient management and pricing strategies for red blood cells (RBCs). Pricing mechanisms must address the perishable nature of RBCs and supply–demand uncertainties to minimize wastage. Government intervention in blood donation and healthcare costs further emphasizes their role in addressing these challenges. This paper utilizes mathematical modelling to investigate pricing within the RBC supply chain, involving stakeholders like governments, public hospitals, and blood banks. Employing a government-led Stackelberg game framework, it considers the precedence of government decisions. Objective functions of each participant incorporate economic and social aspects in both centralized and decentralized scenarios. The study starts with optimizing RBC pricing in blood banks and then establishes coordination mechanisms via revenue-sharing contracts to improve supply chain efficiency, cut costs, and minimize waste—an approach novel in the RBC supply chain context. Finally, the effectiveness of the proposed model is evaluated through a numerical example based on real-world data. Furthermore, sensitivity analyses are conducted on key parameters to provide valuable insights for management decision-making.