Managing Hospital Platelet Inventory with Mid-Cycle Expedited Replenishments and Returns

Production and Operations Management

32 Pages Posted: 11 Sep 2017 Last revised: 28 Dec 2021

See all articles by Kebing Chen

Kebing Chen

Nanjing University of Aeronautics and Astronautics

Jing-Sheng Jeannette Song

Duke University - Fuqua School of Business

Jennifer Shang

University of Pittsburgh - Katz Graduate School of Business

Tiaojun Xiao

Nanjing University

Date Written: December 26, 2021

Abstract

Motivated by the need of small and medium-sized hospitals to improve their platelet inventory management and some best practices, we consider an inventory system for a perishable product with a 3-period shelf-life over a finite horizon, in which the regular replenishment of each cycle is supplemented by an inventory adjustment opportunity in mid-cycle involving expedited orders and returns. We show that optimal regular replenishment policy is an (s, S, S(x)) policy: If the initial net inventory x is below the threshold s, it is optimal to place a regular order to raise the inventory to a state-independent target S; otherwise, raise the inventory to a state-dependent target S(x). We also show that the mid-cycle inventory adjustment policy is a control-band policy with two thresholds. If the mid-cycle net inventory is above the upper threshold, it is optimal to return the inventory in excess to that threshold to a central bank; if the mid-cycle net inventory is below the lower threshold, it is optimal to expedite replenishment up to that threshold; otherwise, do nothing. If non-fresh platelets are used in the expedited order, we obtain closed-form expressions for the optimal policy parameters. If fresh platelets are used for the expedited order, we apply antimultimodularity techniques to establish structural properties of the optimal policy to guide practice and reveal the substitution relationship between the replenishment quantity and the existing inventory of various ages. These structural properties also hold for the case of general shelf lives. Our numerical study shows that our more flexible policy outperforms those studied in the literature.

Keywords: Inventory Replenishment, Healthcare Management, Perishable Product, Dynamic Programming

JEL Classification: C61, E22, D81

Suggested Citation

Chen, Kebing and Song, Jing-Sheng Jeannette and Shang, Jennifer and Xiao, Tiaojun, Managing Hospital Platelet Inventory with Mid-Cycle Expedited Replenishments and Returns (December 26, 2021). Production and Operations Management, Available at SSRN: https://ssrn.com/abstract=3032926

Kebing Chen (Contact Author)

Nanjing University of Aeronautics and Astronautics ( email )

Yudao Street
210016
Nanjing,, 210016
China

Jing-Sheng Jeannette Song

Duke University - Fuqua School of Business ( email )

100 Fuqua Drive
Duke University
Durham, NC 27708
United States

HOME PAGE: http://people.duke.edu/~jssong/

Jennifer Shang

University of Pittsburgh - Katz Graduate School of Business ( email )

Pittsburgh, PA 15260
United States

Tiaojun Xiao

Nanjing University ( email )

Nanjing, Jiangsu 210093
China

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