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

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.

Citation

Duong, L.N.K., Wood, L.C. and Wang, W.Y.C. (2020), "Inventory management of perishable health products: a decision framework with non-financial measures", Industrial Management & Data Systems, Vol. 120 No. 5, pp. 987-1002. https://doi.org/10.1108/IMDS-11-2019-0594