Cyclic stochastic two-echelon inventory routing for an application in medical supply

Abstract

Drug availability in clinics is essential for patient services, whose demand for medication is uncertain. Thus, clinics must have a variety of drugs available, leading to high inventory holding costs. In Germany, it is common for a larger central clinic to take over the procurement of drugs and distribute them to smaller surrounding clinics, which results in a two-echelon network structure. The clinics, however, operate according to their inventory policy as they plan independently. Additionally, the inventory policies include instant replenishment orders to avoid shortages, which can be executed by various vehicles, such as vans or aerial drones, because the orders only involve a few medications.