Inventory control for point-of-use locations in hospitals

Abstract

Most inventory management systems at hospital departments are characterised by lost sales, periodic reviews with short lead times, and limited storage capacity. We develop two types of exact models that deal with all these characteristics. In a capacity model, the service level is maximised subject to a capacity restriction, and in a service model the required capacity is minimised subject to a service level restriction. We also formulate approximation models applicable for any lost-sales inventory system (cost objective, no lead time restrictions etc). For the capacity model, we develop a simple inventory rule to set the reorder levels and order quantities. Numerical results for this inventory rule show an average deviation of 1% from the optimal service levels. We also embed the single-item models in a multi-item system. Furthermore, we compare the performance of fixed order size replenishment policies and (R, s, S) policies.

Keywords:

• health service
• inventory
• service level
• capacity limitations
• heuristics

^†Research performed at Department of Mathematics, Faculty of Exact Sciences and Department of Information Systems and Logistics, Faculty of Economics and Business Administration, VU University Amsterdam, De Boelelaan 1081a, 1081 HV Amsterdam, The Netherlands.

^†Research performed at Department of Mathematics, Faculty of Exact Sciences and Department of Information Systems and Logistics, Faculty of Economics and Business Administration, VU University Amsterdam, De Boelelaan 1081a, 1081 HV Amsterdam, The Netherlands.

Acknowledgements

The authors would like to thank VU University Medical Centre and Hospital Amstelland for their collaboration and especially Ms L. Roos (replenishment department, Hospital Amstelland) for collecting the data.