The pediatric vaccine stockpiling problem

The U.S. has experienced many major interruptions of its pediatric vaccine production in the past decade. The Centers for Disease Control and Prevention (CDC) copes with these shortages by building a national stockpile of pediatric vaccines, which it makes accessible to the public in the event of a shortage. The management of this stockpile is difficult due to limited production capacity and long and unpredictable production interruptions. In this paper, we address policies for managing the stockpile. We provide sufficient conditions for the optimal policy to be a modified state-dependent base-stock policy, with the base-stock level decreasing in the pipeline inventory. Since the optimal policy is in general difficult to evaluate, we derive bounds on the optimal decision in each period. We develop an efficient policy that performs on average within 1% of optimality in simulations. We show that stocking the same supply of vaccine of every type can be over-conservative in some cases, and inadequate in others by large factors. We also quantify the substantial reduction in inventory level that can be achieved when there are multiple suppliers in the market.