A simulation approach for evaluating medication supply chain structures

ABSTRACT

Healthcare costs per capita in the United States are one of the most expensive in the world. It may be surprising to note that the second largest expense in a hospital is in inventories. In this paper, we address the need for developing better quantitative models of the hospital medication supply chain system. We develop two simulation models which represent commonly used supply chains: centralised and stockless. We present a case study using meropenem, an antibiotic, to explore the impact of product and demand characteristics on the cost effectiveness of each approach. The results show that while the stockless system is almost always higher performing in terms of cost, it may be at the expense of patient safety. The results of the simulation models suggest developing a strategy using classifications to aid strategic supply chain decisions related to the hospital environment could improve inventory management.

KEYWORDS:

• Simulation
• supply chain management
• inventory

Disclosure statement

No potential conflict of interest was reported by the authors.