Determining Expected Value and Variance of Demand for Safety Stock Level under Random Parameters

Abstract

The patients demand is vital in healthcare area. Thus, to determine safety stock level is also significant. But, determining safety stock level in inventory systems based on stochastic lead-time is a much smaller section of literature especially in healthcare area. Therefore, this study aimed to contribute to the literature in this area. This study is investigated for calculating the expected value and variance of demand for determining safety stock level under random parameters (the number of arrivals, transferal rates between levels and length of stays). The lead-time required when supplying medical material in the hospital is also random. A case study is presented using with the real data obtained from Neonatal Intensive Care Unit which has a complex inventory system because of the random parameters and transferal probabilities between levels