Comparative research on three-echelon and two-echelon medicine inventory model with positive lead-time

According to the principle of minimizing total cost, the three-echelon optimized medical inventory model with stochastic lead-time and two-echelon optimized medicine inventory model with fixed lead-time are established. The relationship between lead-time and inventory cost is studied by Matlab software. It shows that the variety of lead-time has an important effect on medicine inventory systems. Numerical simulation and sensitivity analysis of two models are presented by Lingo software. Based on analysis, it is concluded that the two-echelon model with lead-time results in inventory cost savings, and keeps the quality of care as reflected in service levels when compared with the three-echelon network structure.