Inventory Management of Platelets in Hospitals: Optimal Inventory Policy for Perishable Products with Regular and Optional Expedited Replenishments

Deming Zhou (), Lawrence C. Leung () and William P. Pierskalla ()
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Deming Zhou: Department of Decision Sciences and Managerial Economics, Chinese University of Hong Kong, Shatin, N.T., Hong Kong, China
Lawrence C. Leung: Department of Decision Sciences and Managerial Economics, Chinese University of Hong Kong, Shatin, N.T., Hong Kong, China
William P. Pierskalla: Anderson School of Management, University of California, Los Angeles, Los Angeles, California 90095

Manufacturing & Service Operations Management, 2011, vol. 13, issue 4, 420-438

Abstract: Platelets are short-life blood components used in hospital blood transfusion centers. Excluding time for transportation, testing, and arrangement, clinically transfusable platelets have a mere three-day life span. This paper analyzes a periodic review inventory system for such a perishable product under two replenishment modes. Regular orders are placed at the beginning of a cycle. Within the cycle, the manager has an option of placing an additional order, referred to as an expedited order, characterized by an order-up-to level policy. For this platelet inventory problem, we prove the existence and uniqueness of an optimal policy that minimizes the expected cost. We then derive the necessary and sufficient conditions for the policy, based on which an algorithm is developed. Using real-life data, we provide a numerical illustration and a sensitivity analysis followed by extensive simulation experiments to examine the dynamics of platelet inventory management. It is shown that the optimal cost is significantly affected by demand uncertainty, lead times, seasonality, and vintage of expedited orders. Given a hospital's demand profile and the cost parameters, we are able to determine whether the hospital should order daily or every other day (i.e., adopting a combined use of regular and optional expedited orders). We also show that the analytical solution is a good approximation of the optimal policy obtained from simulation experiments, where more realistic features are incorporated. This inventory research problem can be classified as a fixed-lifetime perishable problem with dual modes of replenishments.

Keywords: perishable inventory management; dual sourcing; stochastic dynamic programming (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (34)

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