Stochastic Optimization and Game Theoretic Approaches for Healthcare Supply Chain Analytics



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Reduction in the availability of healthcare due to limited financial resources from one end and an aging U.S. population from the other end necessitate effective use of resources in the health sector. This dissertation, addresses two applications of maximizing the quality of health service, namely, (i) diabetic foot ulcer prevention, and (ii) mitigating the impact of national pharmaceutical shortages.

The first study deals with assessing the effectiveness of education and timely treatment to prevent diabetic foot ulcers and consequences. Considering the increasing population of diabetic patients, the lower quality of life in patients with foot ulcers, and higher treatment costs for diabetic patients with foot ulcers requires effective prevention strategies and timely treatment.

In this study, a decision support system is proposed to evaluate cost-effectiveness for prevention strategies and receiving timely treatment. The anticipated outcome from this study is not only finding the effect of prevention strategies and timely treatment for different types of patients, but also an optimal threshold for expenditures on prevention strategies and treatments.

In the second study, two different analytical approaches to solve the drug shortage problem are investigated. Despite the importance and value of the pharmaceutical market, a significant portion of public procurement spending is known to be lost due to poor practices such as inefficient management of orders and inventory. Together with the inevitable national drug shortages, inefficient inventory management causes lack of medicine leading to patients suffering and has direct life or death consequences.

In this research, two different approaches are proposed to reduce critical shortages of healthcare providers. In the first approach, the optimal inventory policy for a healthcare facility is studied that minimizes the effect of drug shortages in the presence of uncertain supply disruptions and uncertain demand. Computational studies show significant cost savings for the proposed solution compared to the current inventory policy for a local healthcare facility. Second, an inventory sharing scheme is proposed, where hospital decisions are to be studied in a game theory setting. This study is expected to mitigate the impact of shortages for sets of facilities that can collaborate in an inventory sharing scheme without logistics issues.



Stochastic Optimization, Game theory, Diabetic Foot Ulcer (DFU), Inventory management, Inventories, Inventory Sharing