(OR)² : operations research applied to operating room supply chain

Abstract

Massachusetts General Hospital (MGH) is ranked as the top hospital in New England and second nation-wide. It is also the largest hospital in New England; it uses an average of 58 operating rooms, where approximately 150 surgical procedures are performed daily. Management of surgical supplies is a critical component of the processes supporting this infrastructure. Specifically, ensuring the right equipment and supplies are available at the right time is critical for the efficiency and quality outcomes of each of the procedures. The materials management group handles over 10,000 unique items, purchased from more than 400 vendors. The majority (60-70%) of disposable supplies are ordered through Owens & Minor, a medical and surgical supplies distributor. The supplies are stored in multiple locations throughout the hospital, including two central locations as well as carts and cabinets on the surgical floors and in the operating rooms. The work described in this thesis focuses on the inventory management of disposable surgical supplies, where the current system design has inefficiencies in the inventory levels and location of items. Using a data-driven approach, based on historical demand, we calculate base stock levels by item that maintain three days of inventory at a 99 percent service level. In addition, we suggest a methodology to support decisions on inventory locations of the different items. Implementation of the recommended changes is estimated to result in savings of 30-40% in inventory levels (and space), corresponding to a one time saving of $700,000-$900,000, depending on the implementation scenario. In addition, the reduction in inventory levels can be translated to future savings in inventory holding costs at an estimated 40% rate, leading to a saving of roughly $300,000 annually.