Inventory Sharing Strategy for Disposable Medical Items between Two Hospitals

Abstract

When urgent situations occur (e.g., inaccurate demand forecast, traffic accidents, or infectious disease outbreaks), the stock of rescue medical items in the hospital might not be enough to cater to the drastically increased demand. Comparing with placing an expensive emergent replenishment order with dealers, requesting inventory sharing from another hospital with excessive stocks could save time and cost. This paper investigates the operation of the inventory sharing mechanism between two independent hospitals with the consideration of patient behavior. We first identified the inventory decisions when hospitals are under a no-sharing scenario, and derive hospitals’ sharing policies and inventory policies under the sharing scenario. Through numerical experiments, we found that the inventory sharing option is profitable for hospitals compared to emergent replenishment. Furthermore, we investigated the effects of patient behavior, safety inventory level of the hospital, and other cost parameters on inventory decisions. Under the sharing policy, the increase of hospital j’s emergent request rate and safety inventory level increased the optimal initial inventory level of hospital i, while the increase of hospital j’s initial inventory level decreased the optimal inventory level of hospital i. This paper provides more practical suggestions for hospitals’ inventory sharing operation.

Design of resilient and viable sourcing strategies in intertwined circular supply networks

“…For instance, the inventory at the automotive factory during a demand decrease can be redirected to the electronics and medical factories to avoid shortages. This observation is in line with literature arguing that sharing inventories can be profitable (Zhang et al, 2019) and allow better matching of supply and demand (Villa & Castañeda, 2018). Somarin et al (2023) affirmed that stock reallocation ensures the availability of materials and avoids backorder situations.…”

Inventory sharing in healthcare supply chains: systematic literature review and future research agenda

“…The results illustrated that the sharing mechanisms helped improve the freshness ratio and reduced expiry in a medical inventory system (Jin and Agirbas, 2013), resulting in a wastage mitigation rate, total stock depletion and thus a decrease in the stock depletion period (den Nijs et al, 2022;Sohrabi et al, 2021). Furthermore, it helped reduce the risk of shortage and overall inventory levels while increasing the overall resource utilisation rate (Mehrotra et al, 2020;Zhang et al, 2019). The studies also illustrated that under the sharing mechanism, inventory holding and stockout costs and the system's operational costs, were reduced and ultimately gained an extra profit (Chiu et al, 2019;Jin and Agirbas, 2013;Oeser and Romano, 2021).…”

“…The results found that the shortage and cost aspects benefited the most from the adoption of LT policies (Figure 11), which significantly improved service levels (AlAzmi and AlRashidi, 2019; Postacchini et al, 2016;Wu and Mao, 2017) and mitigated the risk of a drug shortage as well as inventory levels (Parvin et al, 2018;Zhang et al, 2019). In addition, this collaboration could improve the product utilisation rate (Zhang et al, 2022), decreasing wastage (Jin and Agirbas, 2013).…”

“…However, inventory-sharing decisions were a priority in this supply sector. Zhang et al (2019) and Jin and Agirbas (2013) illustrated that the transhipment strategy was more feasible and profitable for hospitals than the emergent replenishment and transfer of patients, while Zhang et al (2022) found that retailers and dealers would gain benefits from the sharing action, especially when the salvage value of refunds was relatively low. On the other hand, the transhipment threshold was examined by den Nijs et al management between healthcare services and patients.…”

“…Healthcare supply chains (HSCs) are differentiated from conventional supply chains (SCs) by their high-value products and high degrees of complexity, with stochastic demand and unpredictable supply due to various factors (Zhang et al, 2019), including patient profiles, social traditions, service process or external factors (e.g. contagious diseases and natural disasters) (Aldrighetti et al, 2019;Stanger et al, 2012).…”