A heuristic for selecting multi-item inventory review policies

The frequent use of PAR levels for controlling inventories, and the associated manual effort for tracking usage and ordering replenishments leads to a great deal of inefficiency in inventory management in hospitals and clinics. These processes not only waste significant time and money but also result in numerous errors. Given that each item has its own unique characteristics, the best inventory control system for individual items might be different, and selecting the best system can greatly enhance performance and efficiency. The current practice of simply using the Periodic Automatic Replenishment (PAR) level as the primary approach results in outcomes that are inefficient and time consuming. We present a heuristic algorithm for selecting the best inventory control policy for each item, with the objective of minimizing the average effort to replenish items over a suitable interval of time subject to limited storage space availability. We consider the PAR level and two-bin Kanban policies as they represent two common inventory control approaches in healthcare. We also consider (S, s) and (Q, s) policies even though they are less common in hospitals. We illustrate the model with actual data from a hospital.