University of Twente Student Theses


Developing a framework of inventory management practices for the logistics centralization plan of five departments in UMC St. Radboud

Pinto, L. (2011) Developing a framework of inventory management practices for the logistics centralization plan of five departments in UMC St. Radboud.

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Abstract:Inventory management nowadays is becoming an important part of the operational areas in the world of companies. The reason is that a good inventory management can bring to the company an increase in operational and cost efficiency. In this thesis we focus our attention on improving the inventory management of five departments at Radboud hospital. These departments are involved in a new project that consists in centralizing their inventory management. The main objective of this research is to define a framework of inventory practices as well as to identify an inventory control system for the new centralized situation that improves cost-efficiency without compromising the health of patients. To address our study we first examine literature and guided by that, we perform a series of pilot experiments. When managing inventory the theory suggests that a continuous review system is advantageous in the sense that it helps to keep a closer and tighter control of items, since a continuous track of movements is performed. Furthermore this system requires lower safety stocks which results in less cost. Conversely a periodic review system is more advantageous in detecting problems like spoilage and theft, since it is more effective in tracking real quantities. Moreover, in this kind of system many orders are placed at the same time, which can be beneficial for the company regarding the efficiency on labor force when ordering, unpacking and placing the new replenishments. The experiments executed in this research consist on applying the continuous review system and the periodic review system and comparing results with the current situation on inventory management at the five departments. We based our results and comparisons on the parameters that involve each of the systems and on some Key Performance Indicators. The systems’ parameters are: the expected demand during replenishment cycle, the standard deviation of the demand during replenishment cycle, the safety stock, the reorder point for the continuous review approach and the orderup- to-level for the periodic approach. The KPIs are: the customer service level, and the holding costs. In fact, we compare various target customer service levels on the basis of their associated holding costs. The holding costs –also called carrying costs- include aspects related to housing, material handling, labor used on receiving and warehousing inventories, investment, and spoilage and obsolescence. Our experiments confirm to some level the advantages of the continuous review system.
Item Type:Essay (Master)
UMC St. Radboud, Nijmegen, the Netherlands
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
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