Optimal production decisions in biopharmaceutical fill-and-finish operations

Fill-and-finish is among the most commonly outsourced operations in biopharmaceutical manufacturing and involves several challenges. For example, fill-operations have a random production yield, as biopharmaceutical drugs might lose their quality or stability during these operations. In addition, biopharmaceuticals are fragile molecules that need specialized equipment with limited capacity, and the associated production quantities are often strictly regulated. The non-stationary nature of the biopharmaceutical demand and limitations in forecasts add another layer of challenge in production planning. Furthermore, most companies tend to “freeze” their production decisions for a limited period of time, in which they do not react to changes in the manufacturing system. Using such freeze periods helps to improve stability in planning, but comes at a price of reduced flexibility. To address these challenges, we develop a finite-horizon, discounted-cost Markov decision model, and optimize the production decisions in biopharmaceutical fill-and-finish operations. We characterize the structural properties of optimal cost and policies, and propose a new, zone-based decision-making approach for these operations. More specifically, we show that the state space can be partitioned into decision zones that provide guidelines for optimal production policies. We illustrate the use of the model with an industry case study.