A heuristic approach for integrated storage and shelf-space allocation

Abstract

We address the joint allocation of storage and shelf-space, using an application motivated by the management of inventory items at Outpatient Clinics (OCs). OCs are limited health care facilities that provide patients with convenient outpatient care within their own community, as opposed to having them visit a major hospital. Currently, patients who are prescribed a prosthetics device during their visit to an OC must often wait for it to be delivered to their homes from a central storage facility. An alternative is the use of integrated storage cabinets at the OCs to store commonly prescribed inventory items that could be given to a patient immediately after a clinic visit. We present, and illustrate with an actual example, a heuristic algorithm for selecting the items to be stocked, along with their shelf space allocations. The objective is to maximize total value based on the desirability of stocking the item for immediate dispensing. The heuristic model considers cabinet characteristics, item size and quantity, and minimum and maximum inventory requirements in order to arrive at the best mix of items and their configuration within the cabinet.