Abstract
This study addresses a problem encountered in a nation-wide, large-scale healthcare supply chain that comprises several hundred medical organizations (hospitals, clinics, pharmacies, etc.) and provides highly advanced medical care to several million people. The medical products in the system are perishable, meaning that they become unusable beyond a certain expiry date. It is necessary to track the ages of units in stock and to plan and control the inventory accordingly. The models developed herein represent a multi-echelon, multi-supplier inventory system and unite together aspects of perishability and outsourcing under deterministic demand for medical products, which include both perishable and deteriorating goods. The objective of the study is to determine the optimal number of products to be purchased from regular and outsource suppliers so as to meet the required demand at the minimum operating cost. The solution is a network-flow model that can be used to determine the trade-off between the quantities of items to be ordered from the two types of suppliers in each time period. In addition, the study analyzes different distribution policies to account for the perishable nature of the products. Further insights are obtained by applying the model to a case study of a real-life healthcare supply chain from which interesting results are drawn.
Highlights
Many classic inventory models rely on the assumption that the lifetime of inventory items is indefinitely long
The supply chain we model consists of three echelons: multiple suppliers, a centralized distribution center (DC) where medical products are processed and stored, and the end user
We introduce the following variables: 0 ≤ Xtτ: The number of units of product t purchased from the regular supplier that have been stored at the DC for τ weeks; 0 ≤ Ytτ: The number of units of product t purchased from the outsourcing supplier that have been stored at the DC for τ weeks; 0 ≤ ztτ: The number of units of product t supplied by the regular supplier that are distributed from the DC after τ weeks of storage; 0 ≤ utτk: The number of units of product t supplied by the outsource supplier that are distributed from the DC after τ weeks of storage; 0 ≤ Zsk: The number of products shipped from the DC on week s to hospital k
Summary
Many classic inventory models rely on the assumption that the lifetime of inventory items is indefinitely long. Real-life inventory systems, can consist of perishable products, i.e., products with a finite lifetime, which become unusable after a given expiry date. Some perishable products deteriorate, i.e., their quality diminishes gradually over time ( it may take some time until these products expire completely). Typical examples of deteriorating products are fruits, vegetables, meats, drugs and medical products [1]. An inventory management approach that ignores product perishability and deterioration is likely to yield suboptimal outcomes. Inventory management of medical products raises particular challenges, as medical inventory is highly sensitive to storage conditions (temperature, humidity, etc.)
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
