Inventory management of perishable health products: a decision framework with non-financial measures

• Published in: Industrial management + data systems Vol. 120; no. 5; pp. 987 - 1002
• Main Authors: Duong, Linh Nguyen Khanh, Wood, Lincoln C, Wang, William Yu Chung
• Format: Journal Article
• Language: English
• Published: Wembley Emerald Publishing Limited 11.05.2020; Emerald Group Publishing Limited
• Subjects: Analytic hierarchy process; Blood platelets; Collaboration; Computer simulation; Costs; Data envelopment analysis; Decision making; Discrete event systems; Information sharing; Inventory; Inventory management; Operations research; Performance evaluation; Replenishment; Research methodology; Simulation; Supply chains; Decision systems; Substitutable; Perishable inventory management
• ISSN: 0263-5577; 1758-5783
• DOI: 10.1108/IMDS-11-2019-0594

PurposeThis research proposes a decision framework for using non-financial measures to define a replenishment policy for perishable health products. These products are perishable and substitutable by nature and create complexities for managing inventory. Instead of a financial measure, numerous measures should be considered and balanced to meet business objectives and enhance inventory management.Design/methodology/approachThis research applies a multi-methodological approach and develops a framework that integrates discrete event simulation (DES), analytic hierarchy process (AHP) and data envelopment analysis (DEA) techniques to define the most favourable replenishment policy using non-financial measures.FindingsThe integration framework performs well as illustrated in the numerical example; outcomes from the framework are comparable to those generated using a traditional, financial measures-based, approach. This research demonstrates that it is feasible to adopt non-financial performance measures to define a replenishment policy and evaluate performance.Originality/valueThe framework, thus, prioritises non-financial measures and addresses issues of lacking information sharing and employee involvement to enhance hospitals' performance while minimising costs. The non-financial measures improve cross-functional communication while supporting simpler transformations from high-level strategies to daily operational targets.