Safety Stock Modeling for a Medical Devices Supply Chain

Abstract

This thesis examines the current inventory management practices at a leading manufacturer of medical devices, and identifies areas for significant improvement. The analysis reveals inefficiencies in safety stock management, with finished goods inventories being excessively high and raw material stocks being underestimated. The study applies single-echelon and multi-echelon inventory modeling to demonstrate potential cost savings through optimized safety stock levels. Additionally, it highlights the importance of reevaluating high service level targets and improving forecasting accuracy to reduce reliance on costly countermeasures. The thesis also emphasizes the need for effective management of component lead times and enhanced data visibility. Recommendations include transitioning to data-driven safety stock calculations, adopting multi-echelon inventory optimization, reassessing service level targets, enhancing forecasting accuracy, and improving component lead time management. By implementing these strategies, the company can enhance operational efficiency, reduce costs, and build greater resilience in its supply chain.