Reducing expiry of slow-moving critical medical items with transshipment

Abstract

Healthcare providers have to keep high availability for critical medical items that are important to save lives, even if these items have low demand rates. However, keeping high availability can result in high expiry of slow-moving medical items because of their finite lifetimes. Lateral transshipment between inventory locations has been reported to reduce expiry of blood products, which are fast-moving. This paper extends lateral transshipment to slow-moving critical items in a medical system to reduce expiry and proposes a decision rule. Transshipment may take place when demand happens at a location or when a unit expires. The proposed decision rule takes the myopic-best action at each decision epoch by assuming no transshipments in the future. The rule is iteratively applied at all decision epochs to realize long-term savings. Simulation results demonstrate significant cost savings by the lateral transshipment based on the proposed decision rule. The decision rule works well compared to the upper-bound percentage of total savings. The savings are more considerable when the difference of demand rates between locations is large and the lifetime of the medical item is not too long or too short. The savings could be more significant when the number of locations increases but is bounded. Furthermore, simulation results on an example of Fomepizole demonstrate about 9.5% cost savings realized by lateral transshipment based on the proposed decision rule.

Keywords:

• Lateral transshipment
• medical inventory
• perishable inventory
• slow-moving items
• stochastic process