Abstract: Lateral transshipment strategy becomes a powerful coordination mechanism to match demand and supply when supply lead time is relatively long and the demand is difficult to predict.This paper considers ordering and pricing decisions in a pharmaceutical supply chain consisting of one manufacturer and two wholesalers with downstream product transshipment.Under circumstances of decentralized decision-making,this paper provides the optimal order level of wholesalers and the optimal wholesale price of the manufacturer. Moreover,we investigate the overall supply chain performance impacted by the members' decision-making behaviors through numerical experiment in this environment.

Key words: transshipment strategy, pharmaceutical supply chain, ordering decision, pricing decision