2bin inventory optimization considering space constraint

The 2bin inventory system is widely used in hospitals to manage low-cost, high-volume medical supplies due to its simplicity and efficiency. Although previous research has explored determining optimal bin sizes under cycle service level (CSL) constraint, limited attention has been given to incorporating real-world operational constraints. This research presents an optimization model that integrates operational constraints such as storeroom capacity, supplier-imposed packaging sizes, CSL constraint, and the requirement to store related items together. We also derive a closed-form expression for calculating the expected inventory costs under periodic review and periodic review with deferred replenishment policies. Using real hospital data, we validate the proposed model through simulations, demonstrating its effectiveness in enhancing inventory management. The results show notable improvements in efficiency, including reductions in holding and ordering costs, fewer shortages, and lower staff workload. These findings highlight the advantages of using proposed policies for different classes of items.