Research on supply management in hospital based on VMI

Most of the medicines and related supplies in hospitals belong to perishable goods. Considered the features of these goods in this article, Vender Managed Inventory (VMI) is introduced to the research of supply chain management in hospitals. A quantitative model of tow stage supply chain inventory or supplier-hospital is established to compare the inventory cost of hospitals and their suppliers before and after the adoption of VMI. Through a quantitative comparison, it is confirmed that the adoption of VMI can effectively reduce the overall inventory cost of the hospitals and the supply chain. Though the suppliers´ inventory cost may increase, a win-win solution between suppliers and hospitals could be worked out through transferred payment method. With this method, VMI could help to reduce the overall inventory cost and get Pareto equilibrium of the supply chain.