Improving efficiencies in pharmaceutical distribution channels using the economic order quantity model.
The purpose of this study was to investigate empirically the potential cost savings to a pharmaceutical wholesaler using the Economic Order Quantity (EOQ) model. This model allows for calculating the order quantity that minimizes both ordering and holding costs. A regional pharmaceutical wholesaler was selected for a case analysis study using the EOQ model. Eleven brand name products were randomly selected for the analysis. The average yearly cost savings using EOQ was $31.92 per product. The potential yearly cost savings based on 8500 brand name stock-keeping units was $271,320. Using EOQ can therefore assist pharmaceutical wholesalers in minimizing holding and ordering costs and improve efficiency for pharmaceutical distribution channels.
Sullivan
D L
DL
Ohio State University College of Pharmacy, Columbus.
Schommer
J C
JC
D017046:Cost Savings / Q000191:economics; D016527:Drug Costs; D004345:Drug Industry / Q000191:economics* / Q000379:methods; D017850:Economics, Pharmaceutical; D006801:Humans; D017059:Models, Econometric; D011358:Product Surveillance, Postmarketing