Perishable inventory management system with a minimum volume constraint

Z Shen, M Dessouky () and F Ordonez
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Z Shen: University of Southern California
M Dessouky: University of Southern California
F Ordonez: University of Southern California

Journal of the Operational Research Society, 2011, vol. 62, issue 12, 2063-2082

Abstract: Abstract The federal government maintains large quantities of medical supplies in stock as part of its Strategic National Stockpile (SNS) to protect the American public in case of a public health emergency. Managing these large perishable inventories effectively can help reduce the cost of the SNS and improves national security. In this paper, we propose a modified Economic Manufacturing Quantity (EMQ) model for perishable inventory with a minimum volume constraint, which is applicable to managing the inventory of medicines for the Strategic National Stockpile. We demonstrate that minimizing the cost of maintaining such a system can be formulated as a non-convex non-smooth unconstrained optimization problem. The property of this model is analysed and an efficient exact algorithm is presented to solve this problem. In the numerical experiment part, we perform sensitivity analysis on several government-controlled system parameters to illustrate how the government can obtain lower costs or a larger stockpile at the same cost by allowing more freedom in the management of the stocks.

Keywords: perishable inventory management; EMQ; non-convex unconstrained optimization problem; emergency response; VMI; pharmaceutical inventory management (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (6)

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DOI: 10.1057/jors.2010.181

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