Toward Effective Common Operating Policies for Medical Items in Ongoing Humanitarian Operations - The Science and Art of Segmentation - A Case Study

Ongoing humanitarian operations can suffer from the lack of medical item availability. The central problem thus becomes how to ensure the right item in the right place at the right time while maintaining appropriate costs. By means of a case study, this research grouped items by various item characteristics and assigned each group a common operating policy. The results of such item segmentation, and the application of common operating policies, was a theoretical increase over the current rule of thumb, single operating policy by 22% in average expected item availability and a decrease in total costs of 2-8%. Yet, similar results were achieved without segmentation. The major conclusion is that consideration of demand variability as a means to achieve greater item availability is key. The determination of appropriate costs becomes a transparent one for the decision-maker. More generally, this approach facilitates the comparison of various inventory management scenarios and the assumption of informed levels of risk.