Hybrid continuous and periodic review policy model for drug inventory management

Abstract

One of the problems in the hospital’s drug inventory is a great loss due to shortage of drug supplies that impact to patients safety and excess storage of drugs in excess of what is needed. Therefore, we need an appropriate inventory policy system for managing drug inventory in hospitals. In this paper, we discuss a hybrid policy drug inventory model with deterministic demand for a single product that combined periodic and continuous review systems. The periodic review system that used in this paper is (s, S) policy. It means that periodical replenishment depend on s and S, if inventory position reach or below s, then a replenishment is placed to raise the inventory position up to S. Meanwhile, the continuous review system that used is (R, Q). Whenever inventory position fall to R, then a replenishment for Q units is placed. Thus, the hybrid policy drug inventory model mix the periodic (s, S) policy and continuous (R, Q) policy. A long-run average cost per hour is used as an objective function in the model. The characteristic of the objective function is investigated and it results that the objective function is a quasi-convex function. Based on the properties of the objective function in the model, the Branch and Bound and Kuhn-Tucker method can be used to determine the optimal long-run average cost per unit of time.