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Ordering policies for heterogeneous platelets demand with unreliable supply and substitution

Abstract This paper develops an inventory model for a hospital that faces two stochastic and heterogeneous demands by platelet age. Demand substitution by using young platelets to satisfy the demand for platelets without age preference is possible. Through impact analysis, we find that substitution can improve the service level and reduce the expected overall cost. When the supply of young platelets is either entirely reliable or entirely unreliable, the hospital can provide a higher service level at a lower cost. During such periods of time, the substitution performance is higher than that when the supply of young platelets has a probability of being unreliable. High demand fluctuation leads to a high cost. When the demand fluctuation of young platelets is moderate, numerical analysis shows that substitution can achieve excellent performance with a reduction in expected cost of more than 5%.