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The Optimal Composition of Influenza Vaccines Subject to Random Production Yields

Listed author(s):
  • Soo-Haeng Cho

    ()

    (Tepper School of Business, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213)

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    The Vaccine and Related Biologic Products Advisory Committee meets at least once a year to decide the composition of seasonal influenza vaccine in the United States. Past evidence suggests that the committee could use a more systematic approach to incorporate observed information and to quantify the risks associated with different options. There are two key trade-offs involved in this decision. First, if the Committee decides to retain the current vaccine composition instead of updating to a new one, there is lower uncertainty in production yields, but the current vaccine could be less effective if a new virus strain spreads. Second, if the Committee decides early with less information, then manufacturers have more production time, but the reduced information increases the risk of choosing a wrong strain. We derive an optimal dynamic policy for this decision. Because of the greater uncertainty in production yields of new vaccines, the optimal thresholds are neither symmetric between retaining and updating the composition nor monotonic over time. We apply our model to past decisions using parameter values estimated from a historical case. Our analysis shows that the dynamic optimal policy can significantly improve social welfare.

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    File URL: http://dx.doi.org/10.1287/msom.1090.0271
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    Article provided by INFORMS in its journal Manufacturing & Service Operations Management.

    Volume (Year): 12 (2010)
    Issue (Month): 2 (November)
    Pages: 256-277

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    Handle: RePEc:inm:ormsom:v:12:y:2010:i:2:p:256-277
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    1. Leslie Olin Morgan & Ruskin M. Morgan & William L. Moore, 2001. "Quality and Time-to-Market Trade-offs when There Are Multiple Product Generations," Manufacturing & Service Operations Management, INFORMS, vol. 3(2), pages 89-104, June.
    2. Kevin F. McCardle, 1985. "Information Acquisition and the Adoption of New Technology," Management Science, INFORMS, vol. 31(11), pages 1372-1389, November.
    3. Morris A. Cohen & Jehoshua Eliasberg & Teck-Hua Ho, 1996. "New Product Development: The Performance and Time-to-Market Tradeoff," Management Science, INFORMS, vol. 42(2), pages 173-186, February.
    4. Gilvan C. Souza & Barry L. Bayus & Harvey M. Wagner, 2004. "New-Product Strategy and Industry Clockspeed," Management Science, INFORMS, vol. 50(4), pages 537-549, April.
    5. Brito, Dagobert L. & Sheshinski, Eytan & Intriligator, Michael D., 1991. "Externalities and compulsary vaccinations," Journal of Public Economics, Elsevier, vol. 45(1), pages 69-90, June.
    6. Sarang Deo & Charles J. Corbett, 2009. "Cournot Competition Under Yield Uncertainty: The Case of the U.S. Influenza Vaccine Market," Manufacturing & Service Operations Management, INFORMS, vol. 11(4), pages 563-576, July.
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