| The past several years have seen many changes in the global healthcare industry. In order to maintain efficiency at reasonable and competitive prices without compromising quality, the planning of operations in the healthcare industry must be consistent with the various changes that have occurred within this industry over the past several years.; One of the major changes experienced by this vital industry is the number of healthcare networks formed and being formed through mergers. In 1997, the number of mergers in the USA totaled 997. By all accounts, the formation of such healthcare networks appears to be irreversible and should increase in the foreseeable future. Among the challenges faced by these networks is the effective management of the logistics functions, which govern the effective distribution of items across and within healthcare facilities.; The focus of this dissertation is to address the issue of effectively and efficiently managing an important aspect of the distribution system, that aspect which deals with the distribution of routinely used items. Specifically, the paper proposes a multi-echelon inventory approach for analyzing inventory decisions in a typical healthcare network. Two related models are presented that capture the unique demands and peculiarities of two alternative network structures. The first model analyzes a three-echelon distribution system consisting of a warehouse, N hospitals, and ni departments, while the second model analyzes a two-echelon distribution system consisting of a service center and N*ni departments. Both models seek to determine the optimal order-up-to-inventory levels at each echelon that minimize total expected inventory costs within set service level constraints.; We believe that this body of research provides another platform from which other related research in the healthcare industry can be launched. |
