JUST IN TIME PROCUREMENT AND INVENTORY MANAGEMENT FOR A HOSPITAL

Abstract

In this thesis we review a hospital supply chain management system and propose a purchasing optimization model to improve efficiency. We provide a background on the hospital being studied and evaluate current hospital practice by mapping out all the supply chain related processes and identifying appropriate key performance indicators (KPIs) to assess the current hospital operations. A mixed integer programming (MIP) model to optimize procurement and inventory management is then proposed. Utilizing CPLEX solver in GAMS, we obtain the exact solution to the problem using real data from the hospital. To overcome the complexity of implementing a MIP model in a hospital setting, we develop a heuristic algorithm and present numerical computations to test its performance. A visual basic application is developed in Excel to automate the steps of heuristic model and facilitate the implementation. Finally, the performance of the heuristic model is tested against the exact solution. We find that the heuristic solutions are on average 97% close to the exact solution.