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Viewpoints

A REACTION TO: OPPORTUNITY COSTS AND ELEMENTARYINVENTORY THEORY IN THE HOSPITAL SERVICE

I DISAGREE completely with the view put forward by Duncan and Norwich1

that the opportunity cost associated with the money invested in hospitalinventories should be disregarded for the purposes of deriving stock controlpolicies simply because the precise responsibilities and terms of reference of anASO omit reference to it and because the money comes direct from DHSS ratherthan via the RHB or HMC. The whole spirit of OR is to take a holistic view ofa situation and not to produce results distorted by administrative boundaries.If an ASO can free money that is tied up in hospital inventories, then he iscontributing to the nation's health service. And that surely is what he is therefor, even if it is not explicitly stated in his job description!

Institute for Operational Research, Coventry

REFERENCE

R. HARRIS

1 I. B. DuNCAN and H. S. NoRWICH (1973) Opportunity costs and elementary inventorytheory in the hospital service. Opt Res. Q. 24, 27.

OPPORTUNITY COSTS AND ELEMENTARY INVENTORY THEORYIN THE HOSPITAL SERVICE

WHEN I was Supplies Officer of a Hospital Group which did not possessunlimited storage space or staff, I was required to provide for the hospitals'stores an agreed service factor at the most economical cost. As an AreaSupplies Officer (ASO) responsible for supplies for a number of Groups ofHospitals I contend that I have the same obligation to each Hospital Manage.ment Committee (HMC), my Regional Hospital Board (RHB), the Departmentof Health and Social Security (DHSS) and the taxpayer.

I regret therefore that I cannot accept the premise of the paper by Duncanand Norwich,1 particularly since many of the arguments used by the authors ofthis paper suggesting that the concept of holding costs is inappropriate tohospital stores are incorrect, misleading or irrelevant, e.g. certain arguments inregard to storage space- (storage space can be, and is, provided out of revenue- the ASO with unlimited storage space at his disposal has holding costs whichare revenue).

A study of the DHSS policy on supplies HM(67)95-National Health Service(Hospital Supplies Organization), relevant reports and circulars, and the job

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