Improving efficiencies in pharmaceutical distribution channels using the economic order quantity model

D. L. Sullivan, J. C. Schommer

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

Abstract

The purpose of this study was to investigate empirically the potential cost savings to a pharmaceutical wholesaler using the Economic Order Quantity (EOQ) model. This model allows for calculating the order quantity that minimizes both ordering and holding costs. A regional pharmaceutical wholesaler was selected for a case analysis study using the EOQ model. Eleven brand name products were randomly selected for the analysis. The average yearly cost savings using EOQ was $31.92 per product. The potential yearly cost savings based on 8500 brand name stock-keeping units was $271,320. Using EOQ can therefore assist pharmaceutical wholesalers in minimizing holding and ordering costs and improve efficiency for pharmaceutical distribution channels.

Original languageEnglish (US)
Pages (from-to)1146-1153
Number of pages8
JournalClinical Therapeutics
Volume15
Issue number6
StatePublished - Dec 1 1993

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