An (s, S) Inventory Optimization Problem: A Case Study for a Hospital

An (s, S) Inventory Optimization Problem: A Case Study for a Hospital

Gizem Sağol (Yasar University, Turkey), Görkem Sariyer (Yasar University, Turkey), Banu Yetkin Ekren (Yasar University, Turkey) and Mustafa Gökalp Ataman (Çiğli Regional Training Hospital, Turkey)
DOI: 10.4018/978-1-5225-7591-7.ch009

Abstract

Inventory management is one essential lever to use the resources efficiently. However, managing inventories in hospitals is a challenging task because of the several issues: a high service level of medical supplies is required under the unpredictable demand, medical products constitute a significant portion of the overall costs, and the management of these supplies requires considerable effort to check the levels to track usage and to distribute them. Therefore, it is pertinence to apply operations research tools to cope with the managerial issues of the hospital inventory system. In this chapter, the authors implement an (s, S) inventory model by using simulation in a case study of a hospital in Izmir, Turkey. They aim to analyze the unpredictable nature of demand of medical supplies in this hospital and its implications on the developed inventory policy.
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Background

In an organization, inventory has different functions; for instance, it can be used to meet anticipated demand, to protect against shortages, to make use of order cycles, to take the advantages of quantity discounts, to hedge against price changes, etc. (Stevenson, Hojati, & Cao, 2007). Therefore, it is important to use inventory control models to take advantage of these functions. The objective of inventory control is to achieve high levels of customer service while reducing inventory costs including ordering and carrying inventory costs.

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