Reducing inventory cost for a medical device manufacturer using simulation

Abstract

Seeking to enter new geographic markets where expected margins are relatively tight, a manufacturer of medical devices must reduce inventory and related costs in its finished goods supply chain. The manufacturer's supply chain includes four echelons-factories, distribution centers, regional salespeople (also known as "vans"), and customers. The amount of inventory typically held and corresponding reorder policies near the customer end of this supply chain are not known. A simulation approach was selected to provide insight into those inventory levels based on assumed reorder policies. Analysis conducted using a simulation model implemented using SimPy point to significant potential savings, with the value of inventory-related savings over a four year period approaching $200 million.

Classifying healthcare warehouses according to their performance. A Cluster Analysis-based approach

“…In both the situations no stock of direct delivery products is kept in the warehouse, they will be just stored by wards in small quantities. Such a policy is usually applied to high value and less frequently used items, such as medical devices and certain drugs, with benefits in terms of total inventory management costs (Cooper et al. , 2013).…”