Applying Simulation Optimization to Minimize Drug Inventory Costs: A Study of a Case Outpatient Pharmacy

Area of Science:

• Hospital Management
• Operations Research
• Pharmaceutical Sciences

Background:

• Effective drug inventory management is crucial for hospitals.
• Optimizing safety stock and maximum inventory levels for numerous drugs presents significant challenges.
• Current inventory practices may not be cost-effective or efficient.

Purpose of the Study:

• To develop and validate a simulation optimization model for determining optimal drug inventory levels (s, S).
• To reduce hospital drug inventory costs and volumes while maintaining service levels.
• To enhance overall hospital pharmacy management efficiency.

Main Methods:

• Combined a two-stage clustering method with the (s, S) inventory policy.
• Developed a simulation optimization model using Arena OptQuest software.
• Determined optimal minimum (s) and maximum (S) stock values for each drug.

Main Results:

• The simulation model's inventory settings outperformed the existing hospital system.
• Achieved a 55% reduction in average inventory cost.
• Achieved a 68% reduction in average inventory volume.

Conclusions:

• The proposed simulation optimization method effectively improves hospital pharmacy inventory management.
• Significant cost and volume reductions are achievable without compromising patient services.
• The approach enhances inventory turnover rates and operational efficiency.