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

Duong, Linh Nguyen Khanh; Wood, Lincoln C.; Wang, William Yu Chung

Abstract

Purpose: This 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/approach: This 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. Findings: The 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/value: The 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.

• Journal Article Type: Article
• Acceptance Date: Apr 10, 2020
• Online Publication Date: Apr 10, 2020
• Publication Date: May 4, 2020
• Deposit Date: Jul 23, 2021
• Journal: Industrial Management and Data Systems
• Print ISSN: 0263-5577
• Publisher: Emerald
• Peer Reviewed: Peer Reviewed
• Volume: 120
• Issue: 5
• Pages: 987-1002
• DOI: https://doi.org/10.1108/IMDS-11-2019-0594
• Public URL: https://uwe-repository.worktribe.com/output/7487287
• Publisher URL: https://www.emerald.com/insight/content/doi/10.1108/IMDS-11-2019-0594/full/html