Critical-to-life classification for managing inventory in a healthcare supply chain

Abstract

This paper presents a multi-criterion critical-to-life classification technique to supplement the cost and usage measures that are normally employed in hospital inventory management. A system dynamics model was developed employing (R, s, S) inventory control approach for a US private sector healthcare supply chain. Extensive simulation analyses were conducted to study the stock behaviour for low, medium and high usage critical-to-life items to maintain a range of service levels. The (R, s, S) design parameters were optimised according to the variability of item usage, the associated inventory level and supply lead-time. Our findings suggest that the proposed inventory classification technique allows for assigning a particular service level to each critical-to-life item to ensure its availability while minimising the cost and stock-out situations. The proposed simulation tool incorporating critical-to-life inventory classification facilitates hospital logistics managers to devise efficient inventory control strategies based on critical-to-life service level index.