Inventory Management in Response to an Unfolding Epidemic

A generic production-inventory (PI) management framework is developed for a hospital to respond to an unfolding epidemic. The framework is modelled as a closed feedback loop, where the future epidemic behaviour is governed by the medicine supply of current period which further influences the demand for medicine in the future. A Susceptible-Infected-Recovered (SIR) disease diffusion model is coupled with the PI model as a forecasting tool to anticipate the medicine demands of a novel epidemic during production lead time, where the forecasting model parameters in every decision cycle are estimated by calibrating forecasting disease model with past epidemic data. With an illustrative example of a hypothetical outbreak, the performance of SIR model is compared against a näıve forecasting method (defined as next period’s forecast is current period’s demand) and found that SIR model outperforms näıve method in terms of reducing epidemic impact and inventory leftover.