Dual Supply Blood Platelet Inventory Management: An Approximate Dynamic Programming Approach

Abstract

This report formulates a dual-source model that considers artificial blood along with natural blood as sources of blood platelet supply. The model is formulated for a single hospital by considering deterministic lead time while ordering, uncertainty in supply, and demand. A newsvendor model is used to find the optimal order quantity for each day and approximate dynamic programming (ADP) is used to deal with uncertainty over a year. Three different step size rules are being studied and compared in terms of average value function approximation (VFA) per timestep, with two being deterministic step size and the other being an optimal stochastic step size to deal with non-stationary data. The project aims is to select a policy that can reduce shortages, outages, and maximize the rewards for the developed model. Eleven policies are being investigated while introducing artificial blood platelet rewards. Numerical analysis is implemented by considering varied demand and donations for different acceptance percentages and inventory levels of artificial blood under each policy. Another analysis is done to show how shortage and outage values vary for a single source supply vs a dual source (0% acceptance vs 50% acceptance) and are computed for three policies. Computed results show that first in first out (FIFO) is the best policy with the least shortage and outage for various acceptance rates, for varied demand and donations. As the acceptance rate and the inventory level for artificial blood are increased, for 10% a shortage percentage of 5.8% along with 5.9% of outage for natural and 8.8% for artificial is observed. When increased to 30%, 40%, we see an increase in the outage of natural platelets from5.9% to 6.1% along with shortage levels slightly falling. For 50% shortage values falls below 5.2%, outage values fall below 5.7% with outage of artificial from 9% to 8.6%. For the second analysis 0% vs 50%, considering a secondary source can help reduces shortage from 5.8% to 5.1% and outage from 6.3% to 5.7%.