Production planning for medical devices with an uncertain regulatory approval date

Abstract

The demand for medical devices such as pacemakers, defibrillators, catheters and heart valves is growing rapidly throughout the world. This demand is driven by both the “technology push” of new medical device technologies and the “demand pull” of an aging population in North America, Western Europe, and Japan. Production planning for these products is increasing in importance as demand increases, global competition intensifies and product lifecycles shorten. In all developed countries, medical devices must pass through a government approval process. An uncertain government approval date makes it difficult to create production and inventory plans for both the phase-out of an existing product and the phase-in of a replacement product. This paper presents a mathematical model for finding the optimal dates to stop production of an existing product and to start production of a new product in the presence of an uncertain approval date. The paper also presents an example and reports on an implementation in a Fortune 500 medical device firm.

Acknowledgements

The authors thank senior managers at Boston Scientific, Guidant, Medtronic, and St. Jude Medical for their helpful insights into the medical device manufacturing industry. The authors also thank the Associate Editor, two reviewers, and Professor John Buzacott of York University, for very helpful comments on earlier versions of this paper.