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Inventory management strategy for the supply chain of a medical device company

Author(s)
Tjhin, Poi Chung; Pandey, Rachita
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Massachusetts Institute of Technology. Engineering Systems Division.
Advisor
Stephen C. Graves.
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M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission. http://dspace.mit.edu/handle/1721.1/7582
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Abstract
In the medical device industry, many companies rely on a high inventory strategy in order to meet their customers' urgent requirements, sometimes leading to excessive inventory. This problem is compounded when it involves a long supply chain with several stages of activities and with long delivery and processing lead times. It is further exacerbated when high inventory leads to the frequent expiry of items with short shelf lives, which is typical of surgical items that have to be sterilized. Good supply chain strategies can potentially lead to a significant reduction of the supply chain cost. Through the use of relevant mathematical formulae and Strategic Inventory Placement optimization method, this paper examines the extent of the usefulness of a few possible strategies, such as kitting architecture change and continuous review system, for a family of medical emergency surgical kits across the whole supply chain for a medical device company. The result shows that reducing production lead time and review period, as well as adopting certain kitting architecture changes can reduce inventory value by more than 60% and operating cost by more than 20%. In addition, the paper shows that the Strategic Inventory Placement method can further reduce the total inventory value and operating cost by increasing the inventory of finished products and reducing the inventory of components in the supply chain.
Description
Thesis (M. Eng. in Logistics)--Massachusetts Institute of Technology, Engineering Systems Division, 2012.
 
Cataloged from PDF version of thesis.
 
Includes bibliographical references (p. 97-98).
 
Date issued
2012
URI
http://hdl.handle.net/1721.1/77474
Department
Massachusetts Institute of Technology. Engineering Systems Division
Publisher
Massachusetts Institute of Technology
Keywords
Engineering Systems Division.

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