Brief Resume: Vera Tilson is an Associate Professor of Operations Management at the Simon School, University of Rochester
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1 Brief Resume: Vera Tilson is an Associate Professor of Operations Management at the Simon School, University of Rochester Education PhD Operations Case Western Reserve University MS Applied Math Colorado School of Mines BS Electrical & Electronic Engineering MIT Research Interests Healthcare Operations Medical Decision-making Project management Supply chain contracting Teaching Healthcare Operations Management Business Modeling with Spreadsheets Best MBA Teacher Award 2009 Teaching Honor Roll multiple years Industry Experience Software development Project management Product management Systems integration Hardware design Industry Sectors Broadcast technology: NDS (now Cisco) Desktop engineering software: MathSoft Medical devices: Cobe Laboratories B2B software: Polydyne, Inc Consulting: TravelAnalytics Telecom Industry: QuikCat Software 1
2 Key objective of Business Modeling class is to teach representation of complex business problems mathematically - using suitable abstractions
3 Key objective of Business Modeling class is to teach representation of complex business problems mathematically - using suitable abstractions Icebergs for Jeddah: An example of a problem we work on in the course
4 Iceberg deliver problem is an example of a modeling problem used in the course IN 1977, PRINCE MOHAMMED AL FAISAL OF SAUDI ARABIA CREATED A COMPANY THAT WAS DELEGATED TO STUDY THE FEASIBILITY OF TOWING AN ICEBERG CONTAINING 100 MILLION TONS OF SOUTHERN WATER TO THE PORT OF JEDDAH, OR A DISTANCE OF 14,000 KILOMETRES problems posed by any possible towing: the ridiculously slow speed of the convoy, (less than 2kph), the tendency of icebergs to turn in on themselves and dislocate themselves, the melting of a part of the iceberg along the way and insulating it, the approach to the port areas and the reception of the iceberg, the transformation of its ice into water, etc etc. Source:
5 One way to start formulating the problem mathematically is by first drawing a picture. Here is an influence diagram Travel Dist Travel Speed Days at sea Amount Melted Size of delivered iceberg ft 3 of ice per $ spent Initial Iceberg Size Cost of fuel Cost of delivery Tug boat type Tug rental cost
6 After we formulate the problem, model the relationships, we implement the problem model in a spreadsheet
7 Using spreadsheet tools we can perform managerial analyses by varying the inputs to the model
8 To help students with master Excel, I record YouTube videos
9 With my colleague, Greg Dobson, I created an extended modeling exercise based on a project I supervised at an in-hospital pharmacy Case: Reduction of CSP Medication Waste in an In-hospital Pharmacy
10 Compounded Sterile Products (CSPs) are medications that are custom compounded for inpatients in hospital pharmacies Why custom compounding? Chemically stable for relatively short time, so are manufactured in powder or concentrate form Why sterile products? Usually administered directly into blood stream (IVs) Several reasons for waste Misdirected from pharmacy Misplaced in the unit Order cancelled, no longer appropriate cannot be easily reused for another patient 10
11 The majority of CSP doses are prepared in batches Physician Place CSP Order Order Administer Doses Pharmacist Verify safety, inventory & formulary Verify preparation correct Pharma-Tech Batch Plan Prepare CSP batch Once per day Complete Batch Deliver Doses 11
12 The pharmacy manager hypothesizes: Most waste is from cancellations 80% of orders are cancelled within a week of initiation 12
13 Unlike in retail pharmacy, most hospital medication orders are open-ended. Pharmacy can t change the way physicians practice. 13
14 Cancellations waste delivered medication and in prep medication 14
15 To reduce medication waste some pharmacies increased the number of batches, reducing average inventory 15
16 Reducing average level of inventory by increasing the number of batches comes at a cost Lower waste Higher employee hours 16
17 Pharmacy management would like to understand by how much waste can be reduced by increasing the number of batches 17
18 In class we discuss how modeling can be used to quantify waste reduction One order: the inventory diminishes step wise as it is used 18
19 The amount of waste depends on the time order cancellation arrives 2 doses wasted if cancellation at 6 pm, 1 dose if at 6 am 19
20 Since cancellation time is uncertain we can think about expected waste 2 doses wasted if cancellation at 6 pm, and 1 dose if at 6 am The expected waste =1.7 doses if 70% at 6 pm and if 30% at 6 am 20
21 Expected waste depends on the distribution of cancellation times 2 doses wasted if cancellation at 6 pm, and 1 dose if at 6 am The expected waste is 1.5 doses (12% less) if 6 pm and 6 am are equally likely. 21
22 Need to discuss what drives the timing of the cancellations Histogram for the cancellation arrival provided to students 22
23 Arrival of cancellations is driven by the physicians schedules, pharmacy can t control these schedules 23
24 Pharmacy controls Batch scheduling which affects inventory which affects expected waste 24
25 We need to be able to model how batch scheduling will change inventory levels over time 25
26 We show students that for this model it is convenient to change inventory units to hours of supply instead of working with doses 26
27 With inventory of all orders expressed in same units, we can find inventory level for an average order as a function of time 27
28 Next we explain how a linear model can be a good approximation for the level of inventory for an average order 28
29 Using the inventory model and data on arrival time of cancellations we can estimate average waste per cancelled order Distribution of Cancellation Arrival Times Inventory Model 29
30 Example: single daily batch delivered to units by 4 pm 36 Hours of Supply of Medication hours of medication inventory in nursing units Inventory in nursing units Hour of the Day 30
31 Example: Production from 6 am to 2 pm... inventory builds up to 24 hours worth Inventory that has been prepared Production Distribution Hours of Supply of Medication Inventory in lab/distribution Hour of the Day 31
32 Unavoidable virtual inventory 36 Hours of Supply of Medication Virtual Inventory Inventory in lab/distribution Virtual Inventory: Once labels are printed the pharmacy is committed to producing it all.... even if an order cancellations arrive Hour of the Day 32
33 Cancellations histogram can be superimposed on the inventory diagram for a nice visual % % Hours of Supply of Medication Virtual Inventory Inventory in lab/distribution Inventory in nursing units 8.0% 6.0% 4.0% 2.0% Hour of the Day 0.0% 33
34 Currently cancellations arrive when inventory high... leading to significant waste % % Hours of Supply of Medication Virtual Inventory Inventory in lab/distribution Inventory in nursing units 8.0% 6.0% 4.0% 2.0% Hour of the Day 0.0% 34
35 A better IT system that assigns tasks (prints labels) just-in-time would eliminate virtual inventory % Hours of Supply of Medication No Virtual Inventory Inventory in lab/distribution Eliminating virtual inventory would reduce waste by Inventory in nursing units 10.0% 8.0% 6.0% 4.0% 2.0% Hour of the Day 0.0% 35
36 Using this modeling approach students can evaluate waste reduction with various interventions 36
37 Using this modeling approach students can evaluate waste reduction with various interventions 37
38 This exercise can show students how a relatively simple model using only weighted averages can help with real business decisions Models permit the evaluation of likely waste reductions and financial savings before actual process changes are made. Thus the most promising options can be identified prospectively, change efforts targeted accordingly, and realistic targets set In this case, we were able to show that by shifting the time of the batch the pharmacy could significantly reduce medication waste 38
39 Thank You! You can find links to my papers searching for me on Google Scholar 39
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