Inventory management of reusable surgical supplies

We investigate the inventory management practices for reusable surgical instruments that must be sterilized between uses. We study a hospital that outsources their sterilization services and model the inventory process as a discrete-time Markov chain. We present two base-stock inventory models, one that considers stockout-based substitution and one that does not. We derive the optimal base-stock level for the number of reusable instruments to hold in inventory, the expected service level, and investigate the implied cost of a stockout. We apply our theoretical results to a dataset collected from a surgical unit at a large tertiary care hospital specializing in colorectal operations. We demonstrate how to implement our model when determining base-stock levels for future capacity expansion and when considering alternative stockout protocols. Our analysis suggests that the hospital can reduce the number of reusable instrument sets held in inventory if on-site sterilization techniques (e.g., flash sterilization) are employed. Our results will guide future procurement decisions for surgical units based on costs and desired service levels.