Integrated location and inventory decisions in healthcare logistics: model and preliminary results

Abstract

Healthcare institutions, including hospitals and retirement homes, face budget constraints and staffing shortages, driving the need to reduce costs and enhance healthcare logistics without compromising care quality. One key opportunity to improve healthcare logistics is inventory pooling, where inventory from individual warehouses is consolidated into care hubs across a network of institutions, leading to significant cost savings and improved healthcare logistics. Decision support for inventory pooling is facilitated by integrated decision-making on location and inventory management, known as the location-inventory problem (LIP). To familiarize with the current state of LIP research, we conducted a comprehensive literature review across sectors including manufacturing, healthcare, and spare parts. Based on these insights, we developed a mathematical model tailored to the healthcare sector, aimed at minimizing total costs, including location, transportation, and inventory-related expenses, while considering specific constraints such as multiple product types and maximum allowable distance between care hubs and healthcare institutions. This talk will present the key insights from our review, which incorporates 45 recent papers across various contexts. We will also discuss the developed mathematical model, including its objective and constraints. The mathematical model is currently being tested on various instances, and preliminary results will be presented.