A study of healthcare apparel supply chain management with radio frequency identification (RFID) System

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A study of healthcare apparel supply chain management with radio frequency identification (RFID) System

 

Author: Chan, Hau Ling
Title: A study of healthcare apparel supply chain management with radio frequency identification (RFID) System
Degree: Ph.D.
Year: 2015
Subject: Medical care -- Technological innovations.
Radio frequency identification systems.
Hong Kong Polytechnic University -- Dissertations
Department: Institute of Textiles and Clothing
Pages: vii, 183 leaves ; 30 cm
InnoPac Record: http://library.polyu.edu.hk/record=b2806836
URI: http://theses.lib.polyu.edu.hk/handle/200/7921
Abstract: Since a wide variety of healthcare apparel products need to be managed in a healthcare organization, traditionally, an information system such as bar-coding system is an important tool which not only mitigates the workload of the employees but also improves the product availability service level being provided to the patients. Apart from the bar-coding system, in recent years, an Radio Frequency IDentification (RFID) system has been a popular topic in the inventory management in which the operation is more automatic, yet, its application feasibility and adoption impacts in the healthcare industry have not been well explored. This dissertation aims at exploring the business value of the RFID system for apparel product management in the healthcare industry through a multi-methodological approach. To be specific, it consists of case studies and mathematical modeling studies. The case studies firstly help to reveal the existing industrial practice of the apparel products management. It also provides motivation to further examine the use of the RFID system with respect to the current practice in the healthcare industry in the later mathematical modeling studies. In the case studies, one Hong Kong public hospital and one Hong Kong private hospital were chosen as the study targets. After conducting the interviews with the staff members of these two hospitals, it was observed that the bar-coding system had been adopted to manage the apparel products to enhance the operation efficiency. On the other hand, however, they suffered inaccurate inventory planning due to a lack of the scientific inventory determination mechanism. Their supply chains were also not coordinated. As supported by recent industrial reports that the RFID system was a promising tool that can be employed to better manage the apparel products in the healthcare organizations, two analytical studies were conducted to investigate the impact of the RFID adoption for inventory management of healthcare apparel. In the first analytical study, it was motivated by the fact that the successful read rate of the RFID system was only between 60-70%, it addressed the issue on the fact that the accuracy of both bar-coding and RFID scanning systems were imperfect, and explored when the RFID system should be adopted under the existing real industrial practice (of the public hospital) that inventory level was periodically reviewed. To be specific, it was found that the ratios between the RFID and bar-coding systems' stock-taking costs and error variations will determine whether one system outperformed the other one. The impact of optimally changing the scanning system toward the upstream apparel-product supplier and the downstream healthcare organization in a supply chain context was then examined. The analytical result showed that the supplier would always suffer a loss and would be discouraged to work faithfully with the healthcare organization when a new system was in place. Therefore, a surplus sharing contract was proposed to create a win-win situation under which both the supplier and the healthcare organization would have improvement with the change of the scanning system from the bar-coding to the RFID. Numerical analyses were also conducted to better visualize the impact of the RFID system under the proposed contract.
In the second analytical study, as reflected by our real world observations in a local private hospital, it studied an inventory planning decision of a hospital which was using a bar-coding system and considering switching to a RFID system. With the use of the RFID system, the hospital could effectively capture the demand of the correlated products to improve its inventory planning under a quick response system (QRS). QRS is a kind of postponement strategy which enables the hospital to delay the ordering decision to a time point that is closer to the selling season, and the inventory planning (after observing the demand information of the correlated products to update the initial forecast) will become more accurate and precise with respect to the real need of patients (i.e. "customer demand"). This information updating process was modeled by a formal analytical Bayesian approach and the value the RFID system was investigated. By considering the expected value of information acquisition cost of each system, it was found that the hospital should switch from the bar-coding system to the RFID system when the operational cost factor (associated with the RFID system) is smaller than the cost threshold. Later on, the impacts of the QRS on the expected profit and level of risk of (i) the hospital, (ii) the supplier, and (iii) the whole supply chain system were evaluated via the Mean-Variance (MV) framework. Specifically, with the RFID system, the analytical results illustrated that the MV win-win situation in the supply chain cannot be achieved under the QRS alone. Thus, two policies, namely the (hospital-side-driven) service-level commitment policy and the (supplier-side-driven) minimum quantity with price-commitment policy, were introduced to achieve the MV win-win coordination in the RFID-mediated QRS supply chain. Numerical analyses were reported and important managerial insights on the value of the RFID and the respective coordination issues were derived.

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