Decision Support in Healthcare Supply Chain Management and Pharmaceutical Inventory Control

This exploratory research examines the pharmaceutical inventory control practices of a local area hospital and demonstrates the utility of two alternative quantitative approaches. Pharmaceuticals represent a large cost factor for most hospitals due to the significant costs of these products and the storage and control requirements. The hospital stores drugs in the Central Pharmacy and at various Care Units (CUs) throughout the hospital and employs advanced technology to manage inventory and automate the ordering processes at these local storage units. This research examines current hospital policies, employs quantitative methods to improve upon these practices, and provides a decision support tool that allows managers to quickly understand operational, tactical, and strategic implications of changes in the formulary (pharmaceutical product mix available in hospital). This decision support tool affords managers the opportunity to improve management practices and the capacity to support negotiations with stakeholders on issues related to the formulary.