Alvaro Laureano and Aljomar Pedrosa

Thesis Title: A System Study of Rizal Medical Center (RMC) Hospital Pharmacy
Department on Their Inventory Management to Minimize Drug Expirations

I. Problem and Setting 1

Company Profile 1
Company Objective 2
Nature of Business and Products 3
Organizational Structure 4
Area of Concern 8

II. Present System 9

System Objectives 10
Partitioning and Linkages 10
Partitioning in People and Personnel (Man) 10
Partitioning by Information (Materials) 12
Partitioning in Machinery and Fixed and Movable Equipment (Machine) 18
Partitioning in Processes (Methods) 21

I. Problem and Setting

A. Company Profile
RIZAL MEDICAL CENTER is a DOH-retained teaching and training
government runned hospital with 300-bed capacity. Medical specialty
services offers include minimal invasive surgery and endoscopy,
comprehensive maternal and child health care, laboratory and radiologic
facilities with multi-specialty cancer care to nuclear medicine and physical
therapy. Other medical specialists includes pioneers and leaders in
specialty societies.

The hospital has been accredited with the renowned Philhealth award of
excellence and the gold award for sanitary standard compliance by the
Department of Health.
 B. Company Objective

Vision Statement

To be the first choice DOH hospital in the country providing excellent quality healthcare
to Filipinos by 2022

The vision states that the hospital aims to be the preferred medical
institution in the country providing excellent healthcare services with world
class standard to the surrounding community. The statement, clearly
following the SMART format, shows that the medical organization is built up
on its core values of integrity, commitment, excellence, professionalism,
teamwork, compassion, and respect to human dignity and stewardship of
the environment for its clients and providers of care. This makes them one
of the most reputed urban healthcare institutions in Pasig.

Mission Statement

We, at RIZAL MEDICAL CENTER, are committed to provide comprehensive, globally

competitive quality healthcare services to all.
We serve our stakeholders through compassionate, affordable and safe care; continuing
education of our staff, training and research; use of state-of-the-art technology; active
integration of Public Health measures; and effective and efficient utilization of resources.

Their mission, meanwhile, clearly states that they are ready to provide
comprehensive and globally competitive quality healthcare services to all. Quality
service is directly emphasized on this formal statement showing and implying that this is
their unique way of competing with all of the other nearby hospitals in the given area
whether private or government. Particular emphasis on patient care is also directly and
formally addressed in their mission. Aside from their customer oriented services, the
hospital also emphasizes on integrative organizational management through the use of
kaizen or continuous innovative improvement. Training and research are also infused
and integrated to their overall servicing body removing the need of a separate R&D
department. Their utilized facilities and equipment are also assured to observe modern
21st century international quality standards for well balanced service effectivity and
efficiency. Their own local standards as consistently emphasized are also made sure to
follow, cope up, and be updated with the necessary required government decrees and
regulations. Primary focus on process and operations are lastly taken consideration by
proper allocation of scarce and limited resources from allotted budget.

C. Nature of Business and Products

As expected from any hospital whether public or private, RMC must provide the
expected quality health care services for the community. Humanitarian service demand
for reliable medical aid constantly remains to increasing in direct proportion with the
surrounding urban population following basic economics. These critical operations
collectively help promote public dignity by directly protecting and sustaining biological
health itself. Direct care consistently affects social welfare growth and development for
a certain extent. Medical service itself will the main product form focused on this thesis
study.
Services offered include but are not limited to the following:
● X-Ray
● Radiology
● Surgery
● Pediatrics
● Ultrasound
● Laboratory
● Outpatient
D. Organizational Structure
Medical Center Chief
Supports and approves all requirements necessary for the operation and management
of the hospital pharmacy
Chief Training Officer
Helps facilitate and accelerate learning throughout the organization. The CTO directs
the organization’s education, training, and development programs to empower staff and
ensure their maximum effectiveness and contribution to meet organizational goals.
Medical Office
Admin Office
Supervises the overall operations and regulatory compliance of the hospital
Medical Department
Closely coordinates with the pharmacist though the Pharmacy and Therapeutics
Committee on the selection and the proper use of drug.
Nursing
Regularly monitors medicine stored in wards. The provide the pharmacist, data on
medication errors, adverse drug experiences and other drug related concerns.

Cash Collection
Provides the Official Receipt to patients/ clients and presented to the pharmacist as
confirmation of payment for the drug

Budget Section
Provides allocation and Obligation Slip ALOBS as a assurance of funds for the
purchase of pharmacy supplies and requirements
Procurement
Facilitates procurement of supplies and materials needed in the hospital pharmacy

Finance
Analyzes the financial reports submitted by the pharmacist a that are used as basis for
the hospital pharmacy budget estimate.
 E. Area of Concern
● Pharmacy Department
● Inventory Management and Control
● Expired medicines
This thesis study’s concern area is concentrated in the procurement plans
and logistics processes of the hospital’s pharmaceutical department. Problems
regarding the expiration of a few yet critically important medicines consumed due
to inventory will be the main focus for this study. This set of problems is related
with the compliance of the department’s system objectives which will then later be
presented and briefly discussed. Operations involving inventory management are
the driving factors responsible for causing the set of problems during a given
specified time. The present inventory control methods on how these medicinal
units would consumed before their respective expiration dates will be the final
scope.

II. Present System

The present system of Rizal Medical Center will be presented and discussed
in depth and detail. This include the system limits, the spatial, magnitudinal, and
temporal scopes, the system objectives, and the portioning and linkages involved in
the present system of which involves the people, raw materials, information,
machinery, energy, and utilities used in the main service process to be focused on
in this thesis study.
1. System Limits
The scope and limitations of this system study is presented below which are
categorized under spatial, magnitudinal and temporal.
Spatial Scope
The study covers the operations of RMC located at Pasig Blvd, Pasig, 1600
Metro Manila. The Study is only concerned with the Pharmaceutical departments
and their operations pertaining to selling medicine and medical supplies that the
hospitals provides for it clients needs.
Temporal
The conducted study focuses on the observations done and data gathered by
the company from 2010 to 2017, During this time, the study involves determining
the problems or potential problem the organization is facing.
Areal Scope
Since the study pertains to the Inhouse Pharmacy of the Hospital, the study would need
the demand of each medicine per period and the how each medicine is consumed by its patients.
System Objectives

The pharmacy department, under the direction of a qualified pharmacist, is

responsible to provide at all times, an adequate supply of safe, effective and good
quality drugs in appropriate dosage forms consistent with the needs of the patients and
rationalizing drug utilization in collaboration with medical staff. It is also responsible in
bringing the pharmacist closer to patient care areas, facilitating interactions between the
pharmacist and patients.
1. Under Filled must be 15% of the prescribed medicine only
2. Emergency Purchases must be 14 times only per medicine
3. Learning Curve is 5 years before considered an experienced pharmacist
4. Expiration Cost must not go above 100,000

Partitioning and Linkages

Partitioning in People and Personnel (Man)

This linkage plays the most basic part of any business or organization under the
healthcare industry. Available general manpower is assessed and taken in
consideration such that this specific resource must properly be assigned and allocated
for more efficient services. As of August 2018, the department presently has 19 staff
pharmacist personnel comprising of 5 administration assistants, 2 supervisors, and a
single chief.
For the work time of the Chief Pharmacist, supervisors an admin assistant they all have a an 8 hr
job from 8 am to 5 am. For the staff Pharmacist they have at night from 6 pm to 3 pm.

Chief Pharmacist (Pharmacist V)

A Chief Pharmacist supervises and maintains operation of the pharmacy ensuring safe, accurate,
and efficient dispensing of medications. Assign, assist, and supervise work of the pharmacy staff.
Perform staff pharmacist duties when required. Direct and modify pharmacy policies and
procedures according to established pharmaceutical principles and regulatory requirements.
Maintain records and complete required reports and supervise purchasing, receiving, paying for
and prescription reporting of Schedule II drugs. Supervise drug inventory procedures, inventory
management, and security of drug supplies and medication storage outside of pharmacy. Remain
current with pharmaceutical developments.
Qualification:
1. B.S. Degree in Pharmacy;
2. Duly license to practice pharmacy;
3. M.S. in pharmacy or its equivalent of any Masteral Degree;
4. With 6 years experience – 3 years supervisory work and
3 years as dispensing pharmacist; with on the job training / continuing education;
and
5. He must be physically, mentally, emotionally, and morally fit to work.

Staff Pharmacist (Pharmacist II)

Assigned to perform the duties and responsibilities of a Supervising Pharmacist as to enhance
and familiarize in the operation of Pharmacy Department and in cases the Chief Pharmacist is
not available for such reason like leave, seminars, conventions and meetings.
Qualifications:
1. B.S. Degree in Pharmacy;
2. Duly licensed by law to practice pharmacy;
3. Newly graduate / or at least 1 year pharmacy practice, orientation with on the job
training and continuing education; and
4. Physically, mentally, emotionally, and morally fit to work.

Clerk
The clerk responsibilities is responsible to; do all the typing/ filing/ safekeeping of
documents, receiving and releasing of papers pertinent to the operation of the
Pharmacy Department; counter-check paid prescription dispensed by recording in a
logbook.
Qualifications:
1. Completion of two (2) years of college studies;
2. One (1) year experience in the preparation of routine office
correspondence, endorsements, reports or other related clerical work;
3. Must be computer literate with knowledge of WORD, EXCEL.
4. Career Service ( Sub-professional) Relevant Eligibility for First Level
Position;
5. Physically, mentally, emotionally, and morally fit to work.

Partitioning by Information (Materials)

RMC is awarded with an ISO 9001 accreditation which shows that the medical
organization follows and conforms to the prescribed quality management planning.
One of the requirements included to maintain and uphold its service quality is the
use and implementation of strictly standardized systems in all active departments.
The pharmacy department in particular follows these quality standards by strictly
monitoring its inventory stocks and levels by issuing hard printed copies of slips.
These paper slips are used as direct printed evidences of any real formal
transactions from procurement which will later be used for auditing purposes.
Despite the slips, the department also uses automation by still relying on computer
based information technology systems for backup purposes.

Order Slip
Order Slip Summary

Charge Slip
Daily Inventory
Near Expiry Form
Requisition & Issuance Form
Partitioning in Machinery and Fixed and Movable Equipment (Machine)

Most facility machines and equipment are government supplied but

are already owned by the hospital. These hardware basically give energy
and provide utilities to store and maintain the drug stock units. All expenses
for them are also included and internally accounted for.
Medicine Separator
Partitioning in Processes (Methods)

The types of process are based on how the medicinal stock units are utilized by the
hospital that are available at a specific point in time. These medicines are required to come in
generic dosage form. Inventory is then easily managed yet are prone to unwanted leftovers
causing the stock units expire. A specified policy results to where the department must only
stock one single kind of medically approved generic drug. Supply chain from the government’s
Department of Health (DOH) are done through bidding among public health providers and
medicinal suppliers.
RMC’s pharmacy department heavily uses the project procurement management plan
(PPMP) as the basis for their supply chain from DOH in providing the main drug units to stock.
This is for the hospital as a requirement, to comply with and follow the Philippine procurement
law or RA 9184. This formal document contains forecasted numerical stock unit values based
from previous historical data. Its primary use and purpose is to help process the bidding for the
requested stocks in demand which are later submitted to the bid and awards committee (BAC).
This annually reported document makes up one of the backbones of the hospital’s main supply
chain for their inventory management.

Damaged/ Broken Drugs Procedure

The pharmacy staff shall be responsible and accountable for any damaged or broken
drugs medicine and supplies dispenses during their tour of duty and shall be reported to
the incoming pharmacy staff on duty for issuance of Charge Slip through the Hospital
Information Systems. The damaged/ broken drugs, medicines and supplies shall be
paid immediately by the responsible and accountable pharmacy staff either by full
payment or salary deductions. The damaged drugs, medicine and supplies are posted
and deducted in the Hospital Information System. The damaged drugs, medicines
and supplies shall be paid paid immediately by the responsible and accountable
pharmacy staff either by full payment or salary deduction. The damaged drugs,
medicines and supplies are posted and deducted in Hospital Information System.
During the inspection and receiving of drugs and medicine and medical supplies
are posted and deducted in Hospital Information System. During the inspection,
and receiving of drugs,medicine and medical supplies from MMD and CSSD, any
broken or damaged items shall not be received by the pharmacy staff.

Consignment of Drugs
 First, the Pharmacy Department will receive a letter of intent to bid a drug that
they are willing to supply for the department. Then it would be forward to the committee
chairman. The contender company will submit all the pharmacy requirements

Dispensing Procedure
Under this system, selected drug products are stored in the nursing system station in advance and
the nurse is responsible for all aspects of unit does preparation as well as administration and refill
of used items from the pharmacy. Issuance of medicines must be in controlled quantities for
emergency use in treatment areas (OR, RR, DR, ICU)

Requisition and Issuance Procedure

 First, the pharmacy will receive the requisition and issue slip. The staff checks the
availability of the requested items. If the stock is available, she will issues the items to the wards
and file and
Near Expiry Procedure

The Pharmacy staff shall be responsible and accountable for any damaged/broken drugs,
medicines and supplies dispenses during their tour of duty and shall be reported to the incoming
pharmacy staff on duty for issuance of charge slip through the Hospital Information System. The
damaged/broken drugs, medicine and supplies shall be paid immediately by the responsible and
accountable pharmacy staff either by full payment or salary deductions. The damaged drugs
drugs, medicine and supplies are posted and deducted in the Hospital Information System.
During the inspection and receiving of drugs, medicine and medical supplies from MMD and
CSSD, any broken,. Damaged items shall not be received by the pharmacy staff.

Pharmacy Inventory Procedure

First they will record the prescription given by the doctor.

PROBLEM STATEMENT
Situation Appraisal
SWOT Analysis Table

Strength
● An average pharmacist have an
average of 6.5 years working in the
hospital
● The Pharmacy is 95% labelled
Weakness
● Almost 18.89 % of the doctor’s
prescription are not readily
available for inhouse patients
● 1058 units of medicine got expired
in 2017
● Limited medicine storage area

Opportunities
● Unit dose drug dispensing (UDDS)
implemented since March 2017
● RMC is prioritized by the
government Among the priority
hospitals of the National
Government with Php 110 M
budget from DOH for 2019
Threats
● Failed bids among pharmaceutical
drugs from DOH occur at a historical
rate of 15%.
● Department faces a big patient traffic
volume of 122 per day requiring at
least 250 medicines dispensed which
decreases productivity by 2.8% from
the original design capacity.
● Limited number of tertiary hospital
servicing the area

Strength
An average pharmacist have an average of 6.5 years
working in the hospital
 18 out of 24 pharmacists are well experienced pharmacist. Most
of them have 6.5 years of experience in dispensing and organizing
medicines. They are well trained in accounting and dispensing the
medicine needed by the public hospital, and they have earned the trust
and confidence of its patients. With its long years in operations, the
organization is well experienced in running the hospital. The Management
Team of RMC can provide timely and appropriate directions and guidance
to the members of the organizations such that, it can implement
improvements and changes in the hospital in an orderly manner. They are
able to share their experience to the new pharmacist in Rizal Medical
Center.
The Pharmacy is 95% labelled
They Pharmacy is well labeled. They were able to label the racks layer by layer. The medicine
separator was carefully labeled; each cell has a label. Inside the refrigerator, the transparent
refrigerator was labeled. Nevertheless, they were not able to label their palettes. These pallets are
extra container that handles some of their big volume liquids.
Weakness
Almost 18.89 % of the doctor’s prescription are not readily available for inhouse patients
Since the major source of medicine stocks is the DOH, it is dependent on the government
agency's processes and timing, which is currently unstable, and on the quality of stocks. This
resulted to a total of 64,221 Emergency purchase in 2017 for in house patients to sustain. In
some cases, the pharmacy cannot provide the medicines needed since the supplier has not
delivered or not offered their products yet. The pharmacy can effectively dispense up to 79% of
the medications needed by the patients.

In the fiscal year of 2017, the pharmacy lost 216, 994 pesos due to expired medicine
A total of 1058 units medicine got expired. They are mostly vials an bottle form. These a mostly
in liquid form and they have a high value price per unit. They are mostly in Bottle form or in
vials, some are in tablet form but with a regular price only. The average price of these medicine
around 120 pesos each. The most expensive is the suction cutter since it’s a medical supply.
The pharmacy was able to avoid expiration of medicine during march, July, August September
and October.

Date Qty Unit Description Price Total Cost

Dec-16 7 Bot Cetrizine Sysrup 500 mg ₱ ₱

80.00
560.00

Jan-17 1 vl. Hepatitis B vaccine (Ped) ml. 90 ₱ 90.00

Feb-17 168 tab Famotidine 20 mg tab 35 ₱

5,880.00

Feb-17 9 bot Cetirizine 10 mg/ml oral drops 85 ₱

765.00

Feb-17 9 vial Hepatitis B: Vaccine 90 ₱

 810.00

Feb-17 1 bot PLR 500cc 30 ₱ 30.00

Apr-17 1 vl. Doxorubicin HCL 10 mg 150 ₱

150.00

Apr-17 103 vl. Cefoxitin 1g Vial 285 ₱

29,355.00

May-17 5 pc Suction catheter f.12 7000 ₱

35,000.00

Jun-17 16 vl. Rocuronium Bromide 10 300 ₱

mg/ml, 5 ml
4,800.00

Jun-17 6 bot. Balance Multiple Replacement 39 ₱

for Adult 1L
234.00

Jun-17 358 vl. Calcium Folinate 50 mg 200 ₱

71,600.00

Nov-17 9 bot.s Mebendazole 50 mg/ 10 ml 35 ₱

Suspension
315.00

Dec-17 3 Vials Measles Vaccine 300 ₱

900.00

Dec-17 19 Vials Amphotericin B 50 mg 3000 ₱

57,000.00

Jan-18 186 tab Methylergometrine maleate 30 ₱

5,580.00

Jan-18 157 cap. Cefixime 200 mg 25 ₱

3,925.00
Total ₱216,994.00

Unit dose drug dispensing (UDDS) implemented since March 2017

Due to the autonomy of RMC from the government, RMC was available to
develop UDDS where pharmacy staff makes a coordinated method of dispensing and
controlling medications in organized health-care settings. RMC is supported by assistance
program donations from certain organizations. UDDS leads to the reduction of medication errors
and a decrease in the total cost of medication-related activities.

RMC is prioritized by the government Among the priority hospitals of the National
Government with Php 110 M budget from DOH for 2019.
Due to this flexible Budget, the Hospital is able to prepare medicine that are needed to be given
to the people in need. They are a sign of of hope and vigilance.

Threats

Failed bids among pharmaceutical drugs from DOH occur at a historical rate of
15.34%. And 21.59 with no Bid at all
This is a big disadvantage to the UDDS systems because of the low DPRI set by the
department of health. They have to face some emergency purchase to answer the demand of
the everyday FIlipino. The pharmacy needs a constant emergency purchase in order to satisfy
the demands and cure the most important ones

Department faces a big patient traffic volume of 122 per day requiring at least 250
medicines dispensed which decreases productivity by 2.8% from the original
design capacity.
The Pharmacy department has a limited dispensing station and the the people
managing the pharmacy are so few such that it cannot service the majority of the poor
people using it. Die to the Spacing in the pharmacy, it has limited the productivity by
more that 2 and a half percent such that it hamper the speed of searching the medicine
and having the right medicine on the right time. Peak hours start at 10 am in the the
morning and ends at 2 pm in the afternoon.

Limited number of tertiary hospital servicing the area

Such as St. Ignatius Medical center and the medical city
Hospitals nearby:
1. Pasig Children's Hospital
2. VRP Medical Center
3. St. Michaels Hospital
4. Medical City Hospital

Problem Prioritization
Seriousness

5 If the cost incurred is more than Php 500,000

4 If the cost incurred is between Php 400,000 and Php 499,000

3 If the cost incurred is between Php 300,000 and Php 399,000

2 If the cost incurred is between Php 200,000 and Php 299,000

1 If the cost incurred is between Php 100,000 and Php 199,000

Urgency

5 To be solved within 3 months

4 To be solved within 6 months

3 To be solved within 9 months

2 To be solved in 1 year

1 To be solved in 1 year and 6 months

Growth
5 Highly Increasing Growth

4 Increasing Growth

3 No growth/ random

2 Decreasing growth

1 Fast decrease of growth

WOT SUG Matrix

Concerns Seriousne Score Urgency Score Growth Sco Final

ss ( 40%) ( 40%) (20 %) re Score

W1: Almost The patient 4 The 4 As the DPRI 2

18.89 % of the are in need demand increases
doctor’s of intensive of better larger than
prescription are medicines medicine expected
not readily increases
available for year after
inhouse year
patients
department

W2: A total of The total 2 Medicine 3 More and 3

1058 medicine cost s needs to More
got expired in amounted be medicine get
2017 to 216,994 finished expired since
30 days it is not
before finished by
expiry the patient

W3: Limited The 2 They 3 The growth of 3

medicine demand for need a the problem is
storage area better larger slightly
medicine space in 6 increasing
 has been month to
increasing one year

O1: Unit dose The 1 This is 2 These is a 4

drug dispensing systems very need to make
(UDDS) was new much medication
implemented adapted and need to much personal
since March 2017 It needs replenish and in small
further the stock quantities only
testing of lacking
medicine
in the
hospital
most
especially
the in
demand
medicine
s

O2: · RMC is There are 5 The 5 The number 1

prioritized by the about 15% pharmacy of patient
government unserved needs increases on
Among the customers more the 3rd and
priority hospitals during peak more 4th quarter.
of the National hours budget so The hospital
Government which that it can needs to take
with Php 110 M needs to subsidize into
budget from prioritize the consideration
DOH for 2019 by the consign
pharmacy medicine
s

T1: Failed bids Recently The 4 The success of

among DOH was pharmacy the Bidding
pharmaceutical able to needs to process has
companies increase the purchase increased
occur at a DPRI medicine
historical rate therefore from
of 15.34%. And giving more Mercury
21.59 with no margins for
Bid at all the
companies

T2: Department More and The 3 More and

faces a big More rpblem More peopl
patient traffic people are needs to are opting for
volume of 122 opting for be cheaper
per day public addresed treatment.
requiring at hospital for in three
least 250 medication month
medicines time
dispensed
which
decreases
productivity by
2.8% from the
original design
capacity.

T3: Limited The 5

number of hospital is
tertiary hospital far from
servicing the those
area tertiriaty
hostal such
as MEdical
City

Problem Statement

Almost 18.89 % of the doctor’s prescription are not readily available for
inhouse patients
department

II. Review of Related Literature

The Department of Health (DOH) is responsible for developing health policies and
programmes, regulation, performance monitoring and standards for public and private sectors, as
well as provision of specialized and tertiary level care.

2.1 Introduction
 This chapter discusses the importance of inventory management in public government
hospitals. Covering inventory models used in a public facility and inventory management
practices used in public hospitals is the main focus in this study to help manage and address the
issue on expired medicines. Redesigning, reengineering, and improving the inventory methods
and optimization of consumable medical supplies are also included to better analyze and improve
system control. Finally, inventory management will relate business process engineering, total
quality management, automated computer-based inventory system, and lean Inventory to the
system study.

2.2 Inventory Management Principles

Inventory Management determines the time to restock critical medical items

specifically medicines. These items are surely and undoubtedly needed by patients
once they enter and are recorded admitted and accounted as confined in the
hospital. As for non critical items such as supplies, they use a deterministic
inventory model in determining the quantity of medical items to restock. A
deterministic model assumes a constant rate of demand of medical items. In
contrast, other critical medical items use stochastic inventory model to predict the
number of limited medicines that must be replenished. At present, Jurado et. al.
(2015) observed that stock management is a common problem in almost all
companies and organizations due to the uncertainties in the demand and delays in
the deliveries. A conservative solution must be made to avoid stockout in the
inventory system. From the point of view of healthcare sector, medicine
management is the ability of healthcare and pharmaceutical organizations to
optimize the pharmaceuticals use. Some authors state that an appropriate
management of medicines must ensure patient safety in accordance with the five
"R": the right product or the right service to the right patient at the right time using
the right way and in the right quantity (Romero 2013).
2.3 Inventory Model used in Public Hospitals

According to Delaert and Poel (1996) Nowadays, there is much more

interest in the actual costs of a patient, but also in the purchasing costs and holding
costs of the hospital's inventories. Public Hospital are thinking of ways to account
most of costs and find ways as to how can control these extra costs to their
healthcare institution. At present, Liu (2010) observed that general hospitals adopt
the fundamental inventory systems such as EOQ, JIT and ROP as their inventory
practice. They are commonly used by hospital to regulate the inflow and the
outflow of materials in the hospitals. Each Inventory systems have their own
advantages and downsides. Among the three inventory systems mentioned,
Reorder point is the most commonly used because its parameters can easily
determine the timing as to when the material needs to be replenished the exact
amount needed at the time of the demand. However this model only limited to the
demand distribution of an inventory. A model predictive control can be used to
handle multi-variable interactions, constraints on the problem variables, and
optimization requirements in a systematic manner(Jurado et. al. 2015).

2.4 Inventory Practice in Public Hospitals

According to Zhao Qian (2015), Public Hospitals do not really monitor the
source of goods thus the product offered by hospital are above the quality level.
Public Hospitals struggling with under qualified medicines since they have a low
budget and full of inhouse patients. Another study showed that only 49% of the
health facilities did not have out of stock of the tracer medicines. It only means that
there is more than half of the time that shortages of essential medicines, delayed
deliveries, expiry of essential medicines, concerns about quality of the medicines
in the facilities and accumulation of unwanted and expired medicines (Okira et. al.
2013).
 Zhao and Olsen (2016) cited one approach to fight expiration is to rotate
reserve products to hospitals in the absence of an outbreak. This is based on the
observation that hospitals often hold similar supplies and have a regular demand
for them. However, there are no specific guidelines for such rotation. Though
anecdotal evidence suggests some small-scale rotation exists, current rotation if
any is based on personal experience or some heuristics that are not specified in
written documents.
2.5 Optimization of Medical Supplies

According to Mete & Zabansky (2008) Stochastic programming is an

appropriate tool for planning in the preparedness phase due to its ability to handle
uncertainty by probabilistic scenarios representing disasters and their outcomes.
For the stochastic demand case, he develops a simulation-based optimization
approach to find policy parameters and estimates the long-run average cost of the
defined policy. His basic problem setting is for a single item and he later extends
the basic model to consider multiple items (Parsa et al. 2011).

2.6 Computer Based Inventory Systems

Computer-based system is a complex system wherein information
technology plays a major role. It makes the work easier, faster and more accurate.
Due to that fact,the automated scheme has become essential to small and big
companies for they are expected to give the best services possible.

2.7 Lean Inventory

According to Castaldi et. al.(2016), Lean philosophy has been implemented
in many facets of medicine from outpatient areas to critical care units to ancillary
services. There has been some doubt about the applicability of this process outside
of large private medical centers particularly in relationship to operating room
services. We describe the success of the Lean process for the surgical services of a
public, inner-city hospital. Hence, a lean inventory management system allows a
distributor to meet or exceed customers’ expectations of product availability with
the amount of each item that will maximize the distributor’s net profits. Inside a
lean system, a significantly high inventory indicates a warning to the factory that it
needs to remodel its inventory flow. The aim for each company is to have the least
possible inventory of raw material and supplies.

III. Research Methodology

3.1 Background
The group initially thought of a public hospital as a good system to study since it
has numerous problems in a system. Studying a public healthcare so we can solve
some issue about healthcare industry most especially since its funded by our
government. Thus, systems has a lot of inventory problems which allowed us to
dig deeper in this problem. The factors in considered were the interests of each
group member, convenience of acquiring data, ease of communication between the
group and the company, and location of the company.

3.2 Hospital Orientation

The group visited the hospital to have an introducing and have a run through of the
pharmacy processes. At this time, the terms and agreements of both parties were
discussed. It was promised that the confidentiality of the company would remain
intact and the group would responsible to comply with these.

3.3 Data Sourcing

The data was gathered from the company (specifically, processes, forms, and other
necessary information used in this study). The data gathered was mostly from the
pharmacy department. This was acquired by going to the hospital and asking it
from the person in charge. Then for the medicine inventory and pharmacy related
data, the group were to visit their office and ask for the data personally.

3.4 Data Analysis

The data acquired from the company was utilized to create and to process the data
to look for the gaps and inefficiencies within the specified scope. If ever there were
misunderstandings between the data, the group communicates with the company
thru email to clarify.