Kroger’s pharmacy inventory system improved by associate professor Dr. Xinhui Zhang
February 16, 2013
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Kroger, working with a Wright State faculty member, is a finalist for an award based on research and application of a new inventory model.
Dr. Xinhui Zhang, associate professor of biomedical, industrial and human factors engineering, created a model to improve Kroger’s pharmacy inventory system, Seth Bauguess, a writer for the Wright State Dialogue, reported. The finalist will be given the Franz Edelman Award in April, including a $10,000 prize.
“This is the biggest award for practical operation research applications,” Zhang said during a recent interview. There are a total of six companies involved, including Chevron and Dell. The project will be shown to judges at the conference where a winner will be determined.
The model, based on a simulation designed for pharmacy management, saved Kroger $100 million by lowering inventory costs, the Institute for Operations Research and the Management Sciences reported. Kroger has saved an additional $70 million since the system was implemented in Oct. 2011. This partnership with Kroger began with student interns a few years ago, said Zhang. Kroger already had a problem and asked Zhang’s team to solve it. Over approximately a three-month period, the problem was examined, data was collected, and a solution was created. “Then you have a month to show it, demonstrate it, prepare it…,” referencing the final steps in the process.
In June 2010, he and his team finalized the solution, giving Kroger time to implement the solution, Zhang said. Due to the size of the company and the number of locations involved, the system started the following year. Once work was completed, Kroger was able to accurately project demand for 1,950 pharmacies, INFORMS reported. The solution, based in operations research, has helped with Kroger’s ongoing growth. The top finalist will join previous winners such as Hewlett- Packard and Memorial Sloan-Kettering Cancer Center in the honor, INFORMS reported. The award ceremony will take place on April 8 in San Antonio Texas.