A Newsvendor Approach to Design of Surgical Preference Cards

Berk Görgülü () and Vahid Sarhangian ()
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Berk Görgülü: Department of Mechanical and Industrial Engineering, University of Toronto, Toronto, Ontario M5S 3G8, Canada
Vahid Sarhangian: Department of Mechanical and Industrial Engineering, University of Toronto, Toronto, Ontario M5S 3G8, Canada

Service Science, 2022, vol. 14, issue 3, 213-230

Abstract: Surgical procedures require a large number of consumable supplies that need to be kept in hospital inventory and transported to the operating rooms (OR) before the surgery. A surgical preference card (SPC) provides a list of items to be prepared for each surgery. For each item, a SPC also specifies how many should be taken to the OR ( fill quantity). As the usage of most consumables in the OR is subject to uncertainty, the cards also specify how many of the filled items should be opened at the beginning of the surgery ( open quantity). The fill and open quantities control the flow of consumables between the hospital inventory and the ORs and directly affect the wastage in ORs. In this work, we formulate the problem of determining the fill and open quantities on the preference cards as a stochastic optimization problem, where the objective is to minimize a weighted sum of the expected wastage and operational costs. We show that, as in the newsvendor problem, the optimal solution for the fill and open quantities takes the form of critical quantiles of the item usage distribution in the OR. The solution form together with historical usage data provide a data-driven approach to design of SPCs, as well as insights on the value of including an open decision. We demonstrate our approach using extensive numerical experiments and real usage data from a Canadian hospital. The results suggest a potential for significant reduction of wastage and operational costs in the ORs.

Keywords: healthcare operations; surgical supplies; newsvendor problem (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:inm:orserv:v:14:y:2022:i:3:p:213-230

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