Improving Operational Decision-Making in Hospital Pharmacies in the Presence of Disruptions

Abstract

The National Academies of Sciences, Engineering, and Medicine released a consensus study report in 2022 regarding concerns of the resiliency of medical supply chains. Narrowing the focus to pharmaceutical drugs, disruptions have plagued pharmaceutical supply chains long before 2022, but gaps in research prevail regarding how to improve inventory decision-making to help mitigate the negative effects of these disruptions. Supply chain disruptions impact the availability of the drug whereas demand disruptions impact the quantity of a drug needed. Pharmaceutical drugs are also a perishable product implying that hospital pharmacies cannot simply stock-up on a drug to be “safe". This dissertation makes contributions at the intersection of operations research and healthcare by creating a series of mathematical models to improve decision-making, provide insights, and challenge administrative policies in current practice for hospital pharmacy inventory systems.

This dissertation consists of four technical chapters where each chapter has its own model and research contributions. The first technical chapter consists of a simulation-optimization model that is used to solve for reorder point s and order-up-to level S periodic review inventory policies for a hospital pharmacy inventory system with supply chain disruptions and perishability. The model is quickly solved using a Binary Grid-Search algorithm.

From the first technical chapter, we recognize that not all hospital pharmacies have the resources to implement simulation-optimization models in practice. Therefore, we modify some of the assumptions made in the first technical chapter and provide a closed-form model in the second technical chapter. Specifically, the second technical chapter provides closed-form solutions for length of the review period R and order-up-to level S periodic review inventory policies in a hospital pharmacy inventory system with supply chain disruptions and perishability. The model provides the inventory policy quickly and is easy to implement.

Beyond supply chain disruptions and perishability, we recognize that hospital pharmacy inventory systems may face demand disruptions. The third technical chapter builds upon the second technical chapter by creating an adaptive inventory system that incorporates these demand disruptions. The research is designed to answer the following question: How does a drug’s shortage-waste weighting along with the duration of and time between supply chain disruptions influence the benefits (or detriments) of adapting to demand disruptions? We also create a ranking procedure that provides a way of discerning which drugs are of most concern and illustrates which policies to update given that a limited number of inventory policies can be updated.

We recognize that strict regulations in current practice generally prohibit hospital network pharmacies from sharing drugs outside of their network or make it very difficult for hospital network pharmacies to stay compliant when sharing drugs outside of their network. To this end, the fourth technical chapter builds upon the second technical chapter and includes a modeling framework to solve for continuous review order-up-to level inventory policies in a two-hospital network pharmacy inventory system with supply chain disruptions, perishability, and lateral transshipments (i.e., sharing of inventory; integrated inventory system).

The technical chapters of this dissertation capture the challenging characteristics of a hospital pharmacy inventory system like disruptions and perishability. These technical chapters also build upon one another which allows for more in-depth models and insights. Furthermore, patients depend on pharmaceutical drugs for treatment, and this dissertation is designed to help ensure that these patients have access to the treatment that they need.