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A Blood Bank Collection Scheduling and Inventory

Control System
a
C. Carl Pegels
a
State University of New York , Buffalo
Published online: 06 Jul 2007.

To cite this article: C. Carl Pegels (1969) A Blood Bank Collection Scheduling and Inventory Control System, A I I E
Transactions, 1:1, 51-55, DOI: 10.1080/05695556908974413

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 A Blood Bank Collection Scheduling and
Inventory Control System1
C. CARL PEGELS
State University of New York at Buffalo

Abstract: This article presents an analytic approach to the MAlH BLOOD GROUPS
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blood bank collection scheduling and inventory problem.

Based on a specified allowable probability of shortage, the Human blood is divided into four main blood groups,
number of units to be collected is determined. A total of six A, B, AB, and 0. In addition, human blood can be
cases are discussed and models for each case are proposed. broken down into two types, those with the Rh factor,
The six cases arise because of the type of demand forecasts
available, and because of the degree of control a blood bank called Rh positive or just positive, and those without the
has over its donors. Essentially, any kind of demand/supply R h factor, called Rh negative or just negative. Approxi-
situation is covered by the six cases. mately 85 percent of the aggregate population has R h
positive blood, and the remaining 15 percent has Rh
negative blood.
A considerable amount of research effort has been de- The two more common groups of blood are groups A
voted to the study of whole blood inventory control. and 0, while groups AB and B are the rarer types. The
Some researchers have resorted to the application of percentage of occurrence of each of the eight groups of
electronic digital computer simulation (I), (3)) ( 5 ) ) and blood in the aggregate population is shown in Table 1.
(6)) while others have attempted to apply cost criteria
(7). The problem of whole blood inventory offers chal-
- not found in industrial situations. First, human
lenges SYSTEM OBJECTIVE
blood is perishable; second, it has a limited life; third, cost
The objective of the proposed system is to maintain a
cannot be used as an acceptable criterion of performance
level of inventory which will only cause shortages with a
under most circumstances; and, finally, the demand, and
given probability level. However, with eight different
sometimes also the supply, rates are random variables
groups of blood, a shortage can occur in any one or
with variances of considerable magnitude.
several of the groups. In addition, a shortage can occur
The above circumstances force blood center adminis-
because of higher than forecasted mean demand for a
trators to take a middle-of-the-road course. On the one
given group, or, if inventory additions cannot be prede-
hand, they must atten~ptto collect sufficient blood to
termined exactly, it can occur because of a lower than
prevent shortages; on the other hand, excessive collec-
average inventory for a given group.
tions will create inventories with a higher average age of
Based on the above conditions, a model must be devel-
blood, which is an undesirable condition, and will cause
oped which will determine the total number of units to be
some units of blood to expire. A unit of blood expires or
drawn during a planning period, so that the probability
outdates when its age exceeds an age limit, which is cur-
of a shortage during the planning period is less than the
rently twenty-one days.
specified probability which shall be called P. I t is assumed
This article will propose and discuss analytic techniques
I
which will aid the administrator of a large hospital, a
community or a regional blood bank in making the cor-
i rect decisions on the basis of a given level of probability
Table 1 : Percentage breakdown of human blood.
that a shortage will occur during a future planning period.

The research ernbodied in this article was supported by the

Western New York Regional Medical Program and Contract
No. PH-43-68-1281 with NIH. Findings and concluslons do not 34
necessarily represent views of the Public Health Service. I

I
I March 1969 AIIE Transactions 51
 that, if a shortage occurs, the blood bank will go into a
state of emergency, and is able to call in listed volunteer
or paid donors to replenish blood of the group that is
short. For example, if the specified probability @ is set
at 0.05, and if the planning period is one week, then, on
the average, a shortage would occur only five times in a
two-year period.
In our model development, it will be assumed that the
mean supply and demand rates are approximately
parallel during the whole planning period, and constant
for the major part of the planning period. This assump-
tion is quite reasonable because, during a planning period
of one week, blood is typically drawn from Monday
morning to Saturday noon, and the bulk of the blood de-
mand originates during weekdays from elective surgery
and therapy. Only accident cases on weekends would
tend to violate the above assumption.
To summarize then, the objective of the model is to
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predetermine the frequency of shortages on a long-term
basis. Very few shortages will generate excessive inven-
tories and resultant blood expirations; too many short-
ages will create chaotic situations and poor service to pa-
tients in need of the blood.
THE MODELS
In this section, six possible cases, and their respective
solution techniques, mill be presented. Before discussing
the models, the original objective of the model should be
reiterated. It is that, given a probability of allowed
shortage, P, for one or more blood groups, what should
the total planned level of inventory be? Hence, a level of
inventory must be planned so that the probability of
shortage for one or more blood groups is equal to P. This
can be accomplished by the formula
P = 1 - [I - p(i)ln, [I]
where P(z> is the probability of a shortage in blood group
i, and n is the number of blood groups.
We can solve for P(z> as follows:
P(i) = 1 - (1 - @)'in. [2]
It is assumed that the probabiIity of shortage, P(i),
for each of the n blood groups is equal. This assumption
is not mandatory but it facilitates the solution. If the
P(z)'s are not equal, then p can be expressed as:
i=l
We can obtain approximate for the P(z?'s pro-
vided it is known what relative probability each P(i)
should have. For instance, if P ( l ) and P(2) should be
twice as large as the remaining P(i)'s, then an approxi-
mate solution can be obtained by using the approximation
s = 2~ ( 4 ,
i=l
c41
52 AIIE Transactions
and P ( l ) = P(2) = 2P/(n+2) and P(i) = O/(n+2) for
i = 3 , 4, . . . , n.
For reasonably large n, even for n = 8, the approxima-
tion is very close to the actual value. The implication of
this is important for our models because we can essen-
tially ignore the question of how reasonable the assump-
tion of independence implied by Equation 1 is.
Before we move on to discuss the six cases, we shall
briefly discuss demand forecasting. There appear to be
essentially two methods of forecasting demand. On the
one hand, we can forecast mean demand for individual
blood groups and use the Holt, et a1 method1 for estimat-
ing the standard deviations. On the other hand, we can
forecast mean aggregate demand and base the individual
blood group mean demand estimates on the respective
blood group fraction, pi,
The blood group fractions referred to are derived from
the percentages in Table 1 by dividing each percentage
figure by 100. The resulting fractions are typical for the
U.S. population, in general. However, they differ slightly
between races and in some cases also between ethnic
groups. The fractions are, however, commonly used for
planning purposes related to demand as well as to supply.
If it is known that the fractions differ in an area served
by a blood center, the fractions that apply to the local
area should, of course, be used.
If we cannot forecast mean demand for individual
blood groups we have to base the blood group mean de-
mand on the aggregate demand and the respective frac-
tion. The estimate of the standard deviation of each
blood group can then be found by the formula:
cDc = [DPi(l pi)]112. [51
CASE1
The expected value of individual blood group demand
estimates is Bi, and D; is normally distributed with
standard deviation ao,=f(Di). It is assumed that num-
ber of units to be drawn of blood group i, Xi, can be ex-
ecuted exactly through control of on-call donors. If units
on hand at beginning of planning period is Ii, then the
number of units to be drawn, Xi, to ensure a maximum
1 Research by Holt, Modigliani, Muth and Simon (2) has shown
that there is a relation between the st?ndard deviation of demand,
and average demand. For one speclfic consumer product, they
found that the following relation existed:
-
U D = aD,
where uD is the standard deviation of demand, a is a parameter,
and is average demand.
They also found that a somewhat better relationship could be
obtained by the relation
v D = UP,
where a and b are parameters and b is somewhat less than unity.
Volume I No. 1
 probability of shortage, 8, is
-
Ri = Di + - Ii,
ZUD~ 161
where z is the number of standard deviates from the
mean, obtained from the normal tables for
p(Di) = 1 - (1 - p)lInJ [71
where P(Di)is the probability of a shortage because of an
excessive demand, and equal to P(i) in our previous dis-
cussion.
I n this case it is assumed that only an aggregate mean
demand forecast, B, can be obtained. Forecasts of in-
dividual blood group mean demands are not available.
However, for a perfect forecast of D, we can obtain the
expected value of Di:
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and
UDi = [Bpi(l -
191
b = - p~)]llz.
[Di(1
Again, we assume that number of units to be drawn of
blood group i, Xi, can be executed exactly. Hence,
b
For imperfect mean demand forecasts we can use Equa-
tion 10 as an approximation.
I n this case, it is assumed that Di can be forecast and
that the aggregate number of units to be drawn, 8, can
-
be executed exactly, but the individual blood groups,
Ri, i=l, 2, . . , n, cannot be obtained exactly. How-
ever, we can apply the blood group fractions, piJ to ob-
tain the expected value, Xi, of the random variable Ri as
follows :
We must now also obtain the standard deviation of Ri:
However, X is unknown, and we shall therefore use an
approximation of X, X' to solve for U R ~ .After i? has been
I
determined as a function of B', the two values will be
compared and, if necessary, will be recalculated until
X=X'.
1 I n this case, a shortage may be caused by an exces-
sively high demand or by an excessively low number of
units drawn for a blood group.
To find the probability of a shortage, we use a well-
known statistical theorem which states that the sum or
difference of two independent normally distributed ran-
dom variables is also normally distributed with a mean
March 1969 AIIE Transactions
equal to the sum or difference of the two individual
means, and the variance equal to the sum of the individ-
ual variances. Hence, the difference between Ri and Di
is normally distributed with mean mi where
and standard deviation
We can now determine Xi by the formula
The z-value must be chosen so that Equation 2 is satisfied.
After having determined the Xis for all blood groups,
we can find X by summing the Xi's. If X<X1, select
another X I X and recalculate X. Repeat until X=X1.
Similarly, if X> X', select another K' 2 X and recalculate
-
R. Repeat until X = X'.
This case is similar to Case 3, except that we assume
that the mean aggregate demand, -d, is forecast and
UD, is based on Equation 5.
Instead of assuming that the aggregate number of
units to be drawn can be executed exactly, we assume
that the expected value of the aggregate number of units
to be drawn forms the basis of the collection schedule for
the next planning period. Hence, Case 5 becomes an ap-
proximation to Case 3, and Case 6 becomes an approxi-
mation to Case 4.
APPLICATION OF THE MODEL
Suppose the Mercury blood center processes approxi-
mately 50,000 units of blood per year. It plans its opera-
tions for each following week at the end of the current
week. The estimated mean demand for the following week
has been estimated and is shown in the first row of
Table 2. The second row shows the variance of demand
which is obtained from the hypothesis that standard de-
viation of demand is a function of average demand,
that is,
uD, = (~$)l'~. [I6]
Hence, the variance of demand in row two equals the
mean demand in row one. The variance of supply in row
three is derived from Equation 12 with an initial arbi-
trary
- X. I n our example, we started out with an initial
R' equal to l.lODJ which amounted to 1100 units. This
resulted in a X value of 1155 units. The supply variances
were then recalculated with a X' of 1200 units. This re-
sulted in a X value of 1160 units. The last calculation
shown in Table 2 is based on a X' value of 1160 units
which i8 equal to X.
53
Downloaded by [New York University] at 06:31 06 February 2015
Row four shows the sum of the two variances. Row
five presents the standard deviation which is the square
root of the variance. The safety stock is shown in row six.
The safety stock is based on P=0.05 which equals a
probability of shortage for individual blood groups,
P(z? of .0064. The latter is derived from Equation 2 and
provides a z-value of 2.49. The remainder of Table 2 is
self-explanatory.
The example worked out above applies directly to
Cases 3 or 5. The solution procedure will be considerably
easier for Cases 1 and 2. Cases 4 and 6 will be similar to
Cases 3 and 5.
VERIFICATION OF DEMAND VARIATION FORMULA
To verify a relationship such as Equation 16, it is
necessary to collect data over a fairly lengthy period of
time. Observations could be collected on an actual
weekly demand for each of the blood groups or for the
aggregate demand and the standard deviation of the
mean could be calculated every four weeks for groups of
four observations. Over a period of one year there should
be sufficient data collected to obtain an estimate of the
relationship in Equation 16, provided the demand be-
havior is reasonably stable.
To estimate the exponent b of the right-hand term of
Equation 16 we proceed by calculating the mean and
standard deviation over a four-week period. We then use
the formula
to find observations on 6. An average 6 is then calculated
54 AIIE Transactions
from the observations and used as the estimator for b.
We can use the above approach for each individual blood
group or for the total.
An alternate method is proposed in (21, where the de-
mand means and standard deviations for twenty three
products were plotted and a linear relationship was
found to exist between the demand means and the de-
mand standard deviations. Although we have only eight
blood groups, a plot of the means and standard deviations
of these blood groups should provide us with a reasonable
basis for a relationship as hypothesized in Equation 16.
ALTERNATIVE DISTRIBUTIONS
As a final note, it must be pointed out that the assump-
tion of normality for Di and Ri, in case of blood groups
A- and AB-, may not be reasonable. Alternate distribu-
tions that should be investigated for these two blood
groups are the Poisson and the negative binomial.
Adoption of either one of these two distributions will not
change the basic models presented in this article, although
it will present some problems. The Poisson is a desirable
distribution to use, especially for low-volume blood
groups. It has the form
where the parameter m is the mean as well as the variance.
If the mean is not equal to the variance, we can translate
the original mean and the variable to the correct units by
use of the factor y = m/u,2. All observations are multiplied
by the factor g and the new parameter m' becomes
m' = gm.
Volume I No. 1
 The negative binomial distribution is desirable for
blood demand from a theoretical point of view. It is shown
by Quenouille (4) that a random variable distributed
according to the binomial is related to two other random
variables, one of which is Poisson-distributed and the
other logarithmically distributed. Elston and Pickrel
(1) showed that blood demand is essentially the result
of two random variables. One is the number of patients
requiring blood and the other is the number of units of
blood required by each patient. The first random variable
is homogeneous and typical of a Poisson-distributed ran-
dom variable. The other is distributed according to the
logarithmic distribution. The disadvantages of the nega-
tive binomial lie in the limitations of its parameters. One
of its parameters must be integral and the other must be
between zero and one. This can be accomplished, but it
requires a transformation from a common unit to an
alternate unit.
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The negative binominal has the form
I ( 2 ) HOLT,C. C., MODIGLIANI,
I y=0,1,2;..
k=1,2,3,...
O<p_<l
The mean can be shown to be equal to
IL = kp/(l - PI, 1201
and the variance equal to
aa = kp/(l - P)~,
which sets the parameters equal to
p = 1 - p/a2,
and
k = p2/[a2 - p].
Hence, we note p must be smaller than a2, and both
must have values so that k is integral. This can be accom-
plished by using the proper factor g, but it does compli-
cate the procedure considerably.
Finding the safety stock level required for demand
variation is fairly straightforward. The probabilities can
be calculated directly for the upper tail of either distribu-
tion, and the safety stock can thus be determined for
any value of P(D,). With demand and supply variation
it becomes more difficult. The sum or difference of two
random variables is not distributed as the original vari-
March 1969 AIIE Transactions
ables for the Poisson and the negative binomial. How-
ever, we can use the approximation
If we set P(Di) equal to P(Ri), we obtain the quadratic
formula
Since we know P(i) from Equation 2, we can solve for
P(Di), which in turn is equal to P(Ri).
Although it has been fruitful to discuss the two alter-
nate discrete distributions, it appears that the use of the
normal distribution, even in cases where it is definitely
an approximation, is considerably more desirable than
the use of the two alternative discrete distributions.
(1) ELSTON,R . C., and PICKREL,J . C., ''Guides t o Inventory
Levels for a Hospital Blood Bank Determined b y Electronic
Computer Simulation," Transfusion, Volume 5, 1965.
FRANCO,MUTH,J. F., and SIMON,
H. A., Planning Production Inventories and Work Force,
Prentice-Hall Inc., Englewood Cliffs, New Jersey, 1960.
(3) J E N N I N GJ. S , B., Hospital Blood Bank Whole Blood Inventory
Control, Technical Report No. 27, Operations Center, Massa-
chusetts Institute o f Technology, December, 1967.
(4) QUENOUILLE, M. H., " A Relation Between the Loga-
rithmic, Poisson, and Negative Binomial Series," Biometries,
Volume 5, 1949.
(5) ROCKWELL,T . H., LINDSAY,G. F., and HOOVER,T . E.,
Investigation of Community Blood-Banking Systems: A n
Application of Simulation Methodology, T h e Ohio State Uni-
versity Research Foundation, Systems Research Group,
October, 1963.
(6) ROCKWELL, T . H., BARNUM,R . A., and G R I F F I NW, . C., "In-
ventory Analysis as Applied t o Hospital Whole Blood Supply
and Demand," The Journal of Industrial Engineering, Volume
X I I I , No. 2, March-April, 1962.
(7) SILVER,A., and SILVER,A. M., " A n Empirical Inventory
Control System for Hospital Blood Banks," Journal of the
American Hospital Association, August, 1964.
Dr. Pegels i s a n Associate Professor of Management Science
in the School of Business Administration at the State University
of New York at Buflalo. He i s currently engaged in a study on
blood banking management and operations and several projects
on operations analysis. He has had industrial experience with
the Ford Motor Company and teaching experience at Purdue
University, where he received his M S and P h D in Industrial
Administration. H e also holds a B S i n Mechanical Engineering
from the Detroit Institute of Technology. He i s a member of
T I M S , O R S A and the American Economic Association.