Efficient Medical Surplus Recovery

Abstract

We analyze not-for-prot Medical Surplus Recovery Organizations (MSROs) that manage the recovery of surplus (unused or donated) medical products to fulfill the needs of underserved healthcare facilities in the developing world. Our work is inspired by an award-winning North American non-governmental organization (NGO), which utilizes a unique approach to match the uncertain supply of medical surplus with the receiving parties' needs. In particular, this NGO adopts a recipient-driven resource allocation model, where it grants recipients access to an inventory database, and recipients select products of limited availability to fill a container based on their preferences. We first develop an analytical model to investigate the efficiency of this approach. This analysis suggests that the recipient-driven resource allocation model may induce competition for MSRO supplies among recipients and lead to a loss of efficiency through premature orders. Accordingly, we provide a number of operational mechanisms that can help MSROs deal with this problem. These mechanisms are: (i) strategically selecting container capacities while limiting the inventory availability visible to recipients and increasing the acquisition volumes of supplies, (ii) eliminating recipient competition through exclusive single-recipient access to the MSRO inventory, and (iii) focusing on learning about recipient needs as opposed to providing them with supply information, and switching to a provider-driven resource allocation model.

We use real data from the NGO by which the study was inspired and show that the proposed improvements can substantially increase the value an MSRO provides to its recipients.

Keywords: Sustainable Operations, Humanitarian Supply Chains, Reverse Logistics, Medical Surplus