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Differentiating the Hospital Supply Chain

Differentiating the Hospital Supply Chain

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Published by: Chowdhury Golam Kibria on Dec 22, 2010
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11/10/2011

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Differentiating the Hospital Supply Chain For Enhanced Performance
 byDerek T. DeScioliB.S Industrial Engineering (2001)Rutgers University, New Brunswick, NJSubmitted to the Engineering Systems Division in Partial Fulfillment of theRequirements for the Degree of 
Master of Engineering in Logistics
at the
Massachusetts Institute of Technology
June 2005© 2005 Derek T. DeScioliAll rights reservedThe author hereby grants to MIT permission to reproduce and todistribute publicly paper and electronic copies of this thesis document in whole or in part.Signature of Author ...........................................................................................................................Engineering Systems DivisionMay 06, 2005Certified by .......................................................................................................................................Dr. Jonathan L.S. ByrnesSenior Lecturer Thesis Supervisor Accepted by ......................................................................................................................................Yossi SheffiProfessor of Civil and Environmental EngineeringProfessor of Engineering SystemsDirector, MIT Center for Transportation and Logistics
 
 ii
Differentiating the Hospital Supply Chain for Enhanced Performance
 byDerek T. DeScioliSubmitted to the Engineering Systems Divisionon May 06, 2005 in Partial Fulfillment of theRequirements for the Degree of Master of Engineering in Logistics
Abstract
This thesis determines how to design the supply chain policies in a hospital for the wide array of  products that exist there. This research was done through interviewing staff and analyzing dataof two hospitals implementing automated point of use systems. This thesis argues that a hospitalneeds to implement more than one supply chain policy in order to achieve its objective of maximizing patient care while avoiding prohibitive costs. The research further proposes that ahospital should develop its supply chain for a specific product based on that product’s unit cost,demand, variability, physical size, and criticality. The research analyzes demand data from twohospitals and demonstrates that hospital demand can be modeled using a variation of Croston’smethod for intermittent demand. This fact was used to generate an appropriate
s, Q
inventory policy that can be adjusted to fit any product and supply chain policy implemented within thehospital. Under simulation, the proposed inventory policy outperformed existing policies byover 50%. This research further argues current aggregate and “one-size-fits-all” strategies areinappropriate in a hospital and discusses the importance for hospitals to add physical size andcriticality attributes to their product master files as these will enable further supply chainenhancements.Thesis Supervisor: Dr. Jonathan L.S. ByrnesTitle: Senior Lecturer 
 
 iii
Acknowledgements
First, I would like to acknowledge my advisor Dr. Jonathan Byrnes. He kept me focused on themost important value in a thesis – truth, knowledge, and learning.Secondly, I would like to acknowledge Dr. Chris Caplice, the Executive Director of the MLOG program and my secondary advisory. His incredible hard work and insightful vision makes it allseem too easy.Further thanks go to my classmates Jorge Oliveira and Mahender Singh.I would also like to especially thank all staff from the hospitals that took time at of their busydays to be interviewed and provide the data that made this research possible.Most importantly, I would like to thank the company (referred to as DTD, Inc) and its staff thatsponsored and helped organize this research. It is these visionary companies that lead allindustry innovation.
Dedication
This thesis is dedicated to my beloved new wife, Xiaoli, who has been a complete angel and true partner throughout this entire process. She has truly shown me that love has no boundaries andsurpasses both space and time.

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