Managing the essential medicines stock at rural healthcare systems in India

Abstract

PURPOSE: The purpose of this paper is to eliminate the medicine stock-out problem by building an optimum medicine stock in rural healthcare centers in India. DESIGN/METHODOLOGY/APPROACH: Data associated with inflow and outflow of a specific medicine (folic acid tablets) arer collected from all consecutive supply chain stages during the survey. While conducting the survey, it is found that several medicines are out of stock owing to uncertain lead time and demand. Integrating with quantity discount and min-max ( s, S) inventory policy, two models are developed using system dynamics: one is Model 1 with constant lead time and uncertain demand, and the other is Model 2 with both uncertain lead time and demand. FINDINGS: Both models are simulated for a period of one year on Stella 9.1 platform. The results are compared with actual data, and the comparison shows significant improvement of the medicine stock at all downstream stages, while maintaining a certain safety stock. Further, Model 2 suggests a larger stock than Model 1 at each point of time. PRACTICAL IMPLICATIONS: Despite numerous issues, the stocks of medicine in rural healthcare systems can be improved as suggested by the models. The models depict the behavior of inventory stock at each stage of the supply chain and act as a function of time that could be used in the form of a prediction tool for the policymakers. ORIGINALITY/VALUE: This paper is one of the first papers that had developed the model of the medicine supply chain in rural parts of a developing country. It provides a generic framework for the stock assessment and improvement throughout the supply chain.

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