Lean Six Sigma in Healthcare: Combating the Military's Escalating Pharmacy Costs

Sponsored Report (for Acquisition Research Program)Healthcare costs throughout the United States are on the rise, drawing increased scrutiny from government officials and Congress. The cost of pharmacy operations and pharmaceuticals is growing at a rate that is alarmingly higher than that of the total cost of military healthcare itself. Recent congressional legislation has essentially given the Department of Defense the ultimatum to cut costs for beneficiaries wherever possible, or risk having benefits arbitrarily cut by Congress. In the face of this possibility, cutting costs through better business practices must be explored, particularly within the area of pharmacy operations. This project explores the potential cost savings that can be realized by implementing Lean Six Sigma (LSS) methodology in the pharmacy operations of the DoD Medical Treatment Facilities (MTF). This research proves that implementing Lean Six Sigma methodology will improve military pharmacy operations, often at little cost, while realizing significant savings and increased customer satisfaction.Naval Postgraduate School Acquisition Research ProgramApproved for public release; distribution is unlimited

Cramer-von Mises Variance Estimators for Simulations

Proceedings of the 1991 Winter Simulation Conference Barry L. Nelson, W. David Kelton, Gordon M. Clark (eds.)We study estimators for the variance parameter u 2 of a stationary process. The estimators are based on weighted Cramer-van Mises statistics formed from the standardized time series of the process. Certain weightings yield estimators which are "first-order unbiased" for u2 and which have low variance. We also show how the Cramer-von Mises estimators are related to the standardized time series area estimator; we use this relationship to establish additional estimators for u2

DoD inventory management cultural changes and training in commercial practices

As the largest single portion of discretionary spending in the federal budget, the Department of Defense (DoD) is a prime target for budgetcuts. Perceptions of fraud and waste have put DoD under tight scrutiny, resulting in many Congressional inquiries and General Accounting Office (GAO) audits. Several of these have identified excess inventory as an area needing major improvement (see the list of related GAO reports in the References Section). As reported in the GAO Report GAO/HR-97-5, DoD's inventory was estimated to be $69.6 billion in 1995. The report also states that about half of the$69.6 billion inventory is considered excess, beyond what is needed to support war reserve and current operating requirements. While military inventory management practices have remained largely unchanged, the past thirtyyearshavewitnessedarevolutioninthewaycommercialfirmsmanagetheirinventories. The private sector has completely changed its view of logistics and how logistics contributes to profitability. As a result, businesses have slashed their on-hand inventories, improved their distribution systems, developed long-term relationships with a small number of suppliers who produce top-quality products, and improved their bottom lines. How can DoD better manage its inventories, get rid of excesses and free up scarce defense dollars for recapitalization and other needs? Can DoD apply the same commercial practices, such as just-in-time (JIT) inventory, direct vendor delivery (DVD), total asset visibility (TAV), and logistics cycle time reduction, that have slashed private sector inventories

Lean Six Sigma Implementation for Military Logistics to Improve Readiness

Proceedings Paper (for Acquisition Research Program)In general, during the lifecycle of a weapon system, a significantly larger amount of money gets spent on operating and maintaining the system than on acquiring it. Hence, efficient logistics systems, including transportation, inventory management, modifications and maintenance activities, are critically important for containing the lifecycle costs of weapon systems and for maintaining the highest level of military readiness given the extant fiscal constraints. This paper describes Lean Six Sigma (LSS), a strategically important and proven logistics initiative for both reduced lifecycle costs and improved readiness. With aging weapon systems, the US Department of Defense is facing ever-increasing military expenses to maintain military readiness. Hence, the Department of Defense is keenly interested in implementing Lean Six Sigma in all the services. We begin this paper by providing an overview of military logistics and discussing the critical concepts of readiness and cycle-time. Thereafter, we present an overview of Lean Six Sigma methodologies''including Lean production and Six Sigma, and describe the experience in implementing Lean Six Sigma in the Army, Navy and Air force. The paper ends with a discussion of the managerial guidelines for successfully implementing Lean Six Sigma.Naval Postgraduate School Acquisition Research ProgramApproved for public release; distribution is unlimited

Staging queues in material handling and transportation systems

Proceedings of the 2001 Winter Simulation Conference B. A. Peters, J. S. Smith, D. J. Medeiros, and M. W. Rohrer, eds.In most physical queueing applications, customers join a queue andmove forward after each service, leaving room for others to join behind them. Some queues found in material handling and transportation systems do not operate like this because the queued entities (pallets or unoccupied cars, for example) are incapable of moving forward autonomously. We develop a model for the resulting staging queue, and give simulation results for several configurations

Lean Six Sigma in Healthcare: Combating the Military's Escalating Pharmacy Costs

Sponsored Report (for Acquisition Research Program)Healthcare costs throughout the United States are on the rise, drawing increased scrutiny from government officials and Congress. The cost of pharmacy operations and pharmaceuticals is growing at a rate that is alarmingly higher than that of the total cost of military healthcare itself. Recent congressional legislation has essentially given the Department of Defense the ultimatum to cut costs for beneficiaries wherever possible, or risk having benefits arbitrarily cut by Congress. In the face of this possibility, cutting costs through better business practices must be explored, particularly within the area of pharmacy operations. This project explores the potential cost savings that can be realized by implementing Lean Six Sigma (LSS) methodology in the pharmacy operations of the DoD Medical Treatment Facilities (MTF). This research proves that implementing Lean Six Sigma methodology will improve military pharmacy operations, often at little cost, while realizing significant savings and increased customer satisfaction.Naval Postgraduate School Acquisition Research ProgramApproved for public release; distribution is unlimited

Lean six sigma for reduced cycle costs and improved readiness

In general, during the lifecycle of a weapon system, a significantly larger amount of money gets spent in operating and maintaining the system than acquiring it. Hence, efficient logistics systems, including transportation, inventory management, modifications and maintenance activities, are critically important for containing the lifecycle costs of weapon systems and for maintaining the highest level of military readiness given the extant fiscal constraints. This paper will describe Lean Six Sigma (LSS), a strategically important and proven logistics initiative for both reduced lifecycle costs and improved readiness. With aging weapon systems, the US Department of Defense is facing ever-increasing military expenses to maintain military readiness. Hence, the Department of Defense is keenly interested in implementing Lean Six Sigma in all the services. In this paper, we present an overview of Lean Six Sigma methodologies, describe Lean Six Sigma implementations with a focus on military applications, and discuss managerial guidelines for successfully implementing Lean Six Sigma. The paper concludes with a brief discussion of the issues that military planners should take into account in implementing Lean Six Sigma in the military.Approved for public release; distribution is unlimited

Properties of batch means from stationary ARMA time series

The batch means process arising from an arbitrary autoregressive moving-average (ARMA) process time series is derived. As side results, the variance and correlation structures of the batch means process as functions of the batch size and parameters of the original process are obtained. Except for the first-order ARMA process, for which a closed-form expression is obtained, the parameters of the batch-means process are determined numerically. Keywords: Monte Carlo method; Simulation. (Author)Naval Postgraduate School, Monterey, CAhttp://archive.org/details/propertiesofbatc00kan

Risk assessment of readiness and life cycle cost for weapon systems

Acquisition Research Sponsored Report SeriesDisclaimer: The views represented in this report are those of the author and do not reflect the official policy position of the Navy, the Department of Defense, or the Federal Government.Given an acceptable level of military performance, arguably the two most important criteria for weapon systems performance are readiness (operational availability, or Ao) and life cycle cost (LCC). These two criteria are in conflict: one may maximize Ao by increasing LCC or minimize LCC by degrading Ao. In this paper, we develop a model to analyze risk factors associated with this bi-criterion problem. To analyze the impact of input factors on risk, or variance in the outcome criteria, we conduct Monte Carlo simulation. We then apply design of experiments methodologies to identify risk factors by analyzing quantiles of these criteria in which we examine the probability that cost will exceed a certain threshold dollar amount and the probability that readiness falls below a certain threshold.Naval Postgraduate School Acquisition Research ProgramApproved for public release; distribution is unlimited

Impact of logistics on readiness and life cycle cost: A design of experiments approach

Proceedings of the 2010 Winter Simulation Conference, 1336-1346.SEED Center PaperIn this paper we develop two models that can be used to identify critical logistics factors that impact military readiness and the life cycle cost. The first one, a discrete-event simulation model, estimates the operational availability of a weapon system given input parameters under a certain scenario. The second one, a spreadsheet model, computes the life cycle cost using the same input parameters for the simulation model. Our approach is intended to serve as a basis for discussion between program offices concerned with cost and operational commands with operational availability