Perishable inventory management system with a minimum volume constraint

The federal government maintains large quantities of medical supplies in stock as part of its Strategic National Stockpile (SNS) to protect the American public in case of a public health emergency. Managing these large perishable inventories effectively can help reduce the cost of the SNS and improves national security. In this work, we propose a modified Economic Manufacturing Quantity (EMQ) model for perishable inventory with a minimum volume constraint. We identify when this model is necessary and show that minimizing the cost of maintaining such a system can be formulated as a non-convex non-smooth unconstrained optimization problem. We present an efficient exact algorithm to solve this problem. We illustrate the model and algorithm with numerical results for an example managing stocks of Cipro, an antibiotic to treat people for anthrax infection. We demonstrate the advantage of our proposed model over a standard model and perform sensitivity analysis on the government-controlled system parameters. We show that the government can obtain lower costs or a larger stockpile at the same cost by allowing more freedom in the management of the stocks. [