A Stochastic Model for The Inventory Management of Antiretroviral Drugs: A Case Study

Abstract

The Anti Retroviral Treatment (ART) programme of Our Lady of Apostle Hospital Akwanga, Nigeria is faced with uncertain demands for antiretroviral (ARV) drugs and as a result of these, the management encounter stock-outs which is a major threat to the lives of the Patients. This work seeks to provide a solution to this problem via a stochastic modeling of the inventory process. This modeling approach is employed because of the stochastic nature of the demand for the antiretroviral drugs. The model determines for various service levels, the Economic order quantity (EOQ), the Optimal Re-order Point (ROP) and the optimal size of the Buffer stock. It further determine the cost of holding the Buffer stock in inventory (C(B)) , the total cost per unit time of the ordering quantity (TCU(y)) and the total cost per unit time of inventory (TCU(y+B)) for each antiretroviral (ARV) drug. The result of this study is envisaged to provide relevant information that will assist the management of the ART programme in taking decisions that will ensure no stock-out of the drugs. The authors emphasize that unlike most models that only incorporate buffer stock size, this model deem it necessary to determine the size of a buffer stock as well as determine the cost of holding it in inventory. This is because, reducing the probability of stock-outs does increase the size of buffer stock and consequently, the cost of holding the buffer stock in inventory. The study recommends that the holding cost of buffer stock be included in the total cost of inventory and the model be used in selecting an optimal buffer stock size with a manageable cost and appreciable service level.