An optimisation model of drug order quantity and distribution using continuous review approach by considering secondary suppliers
by Benedicta Amadea Karina Dewi; Cucuk Nur Rosyidi; Azizah Aisyati
International Journal of Mathematics in Operational Research (IJMOR), Vol. 24, No. 2, 2023

Abstract: Drug shortages and inefficiencies in drug supply delivery are caused by poor drug purchase and distribution management in the hospital supply chain. A shortage occurs when a product is not available in sufficient numbers to satisfy demand. This research presents a mixed-integer linear programming model with the objective function to minimise the total costs comprising purchase costs, storage costs, distribution costs, and penalty costs due to shortages. The existence of secondary suppliers is considered in this research to overcome drug shortages. Purchases through a secondary supplier will occur if the primary supplier is unable to meet the hospital's demand. The model focuses on the decision-making of determining the number and drugs in each purchase and their distribution to each care unit. The hospital uses a continuous review inventory policy. Moreover, a numerical example is provided to show the applicability of the model using a real case study in a teaching hospital. The optimal solution was found using Lingo 18.0 software. Finally, sensitivity analysis is conducted by changing several parameters' values to determine their effects on the objective function and the decision variables.

Online publication date: Thu, 09-Mar-2023

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