Operations Research for Health Care 2 (2013) 75–85

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Operations Research for Health Care

journal homepage: www.elsevier.com/locate/orhc

Centralized versus distributed sterilization service:

A location–allocation decision model
Houda Tlahig a,b,∗ , Aida Jebali a,c , Hanen Bouchriha a , Pierre Ladet b
a
Laboratoire ACS, Ecole Nationale d’Ingénieurs de Tunis, Université Tunis El Manar, B.P. 37-le Belvédère-1002 Tunis, Tunisie
b
GIPSA-Lab, B.P 46, Rue de la Houille Blanche 38402 St Martin d’Hères, France
c
Prince Sultan University, P.O. Box 53073 Riyadh 1158, Saudi Arabia

article info abstract

Article history: The concept of ‘‘networking’’ has become central to the reform of healthcare systems. The objective is
Received 12 November 2012 to reduce costs while improving the quality of service. This paper deals with the problem of sterilization
Accepted 24 May 2013 service configuration within a hospital network. Two alternatives are considered: (1) each hospital in
Available online 6 June 2013
the network maintains its sterilization service in-house; (2) a central sterilization service ensures this
function for all hospitals in the network. This decision is based on a location–allocation model of the
Keywords:
sterilization service. A Mixed Integer Linear Program (MILP) is proposed to find the optimal configuration
Hospital network
Sterilization service configuration
of the sterilization service (centralized vs. distributed), the optimal location and the optimal capacity of
Centralized vs. distributed the centralized sterilization service over a multi-period planning horizon. The objective is to minimize
Optimization costs related to transportation, production and resource acquisition and transfer. A solution method based
Location–allocation model on the addition of appropriate customized cuts to the original MILP is then proposed. The proposed models
MILP are applied to 30 scenarios extracted from a real-life case study. The obtained results show that the
Valid cuts considered problem can be solved to optimality for moderate size scenarios with the use of commercial
MILP solvers and the addition of the proposed customized cuts to the original model. Further analysis was
conducted and pointed out how network configuration is sensitive to the number of human and material
resources available in each hospital of the network.
© 2013 Elsevier Ltd. All rights reserved.

1. Introduction Healthcare providers strive to minimize patient contamination

The last two decades have witnessed the emergence of net-
works in the healthcare sector. In fact, there has been continuous
growth in the number of hospital networks in both the USA and Eu-
rope. For example, in the USA alone, between 1980 and 1997, the
number of hospitals organized in networks increased from 32.1%
to 73.4% [1].
Hospital networking seems to represent an organizational
choice providing interesting opportunities to cope with cost and
quality issues. In [1], the author states that the pooling of avail-
able resources should improve efficiency and effectiveness due to
synergies and cost savings. The need for efficient resource alloca-
tion in hospitals is obvious and represents the main objective of the
networked organization. Henceforth, restructuring the location of
facilities and incrementally concentrating some services to fewer
locations becomes one of the major focuses of managerial tasks in
the hospital environment.
∗ Correspondence to: EIGSI, 26 Rue De Vaux De Foletier, 17041 LA ROCHELLE,
France. Tel.: +33 546458015; fax: +33 546458010.
E-mail address: houda.tlahig@eigsi.fr (H. Tlahig).
2211-6923/$ – see front matter © 2013 Elsevier Ltd. All rights reserved.
http://dx.doi.org/10.1016/j.orhc.2013.05.001
risks and nosocomial infections. In the operating room this risk
is particularly important. That is why surgical items have to be
free of contamination at the time of use. This is accomplished
by subjecting them to a validated sterilization process and
maintaining the sterility up to the time of use. In France, hospital
sterilization is regulated and restricted by the guide of good
practices [2]. Minimizing the costs and ensuring a high quality
level of hospital sterilization services is subscribed as one of
the challenges of healthcare providers. These objectives could
be reached through the optimization of the configuration of
sterilization services within a hospital network.
In this paper, we intend to investigate the opportunities of
grouping hospital sterilization services and the economical interest
of resource sharing. In order to ensure patient safety, hospitals
in developed countries are investing millions of euros in sterile
instruments; in The Netherlands, for example, the investment
in sterile equipment can be estimated to exceed 500 million
euros [3]. In France, the cost incurred by the sterilization of 1 m3 is
widely varying from one hospital to another. While considering 21
hospitals of the Arc Alpin Region, the cost of sterilizing 1 m3 in 2004
ranged from 187 to 1174 euros [4]. It was noticeable, however,
that this cost tends to be lower in hospitals with relatively
76 H. Tlahig et al. / Operations Research for Health Care 2 (2013) 75–85
large demand. This sparked the interest of studying sterilization
department configuration within hospital network in order to
identify and seize eventual opportunities for cost reduction while
maintaining a high quality and traceability of sterilization process.
Within a hospital network, two major alternatives could be
considered: (1) each hospital performs in-house its sterilization
activities in its premises independently of the other hospitals;
(2) all hospitals of the network opt for the sharing of the common
resources requested by sterilization services by grouping them in
one Central Sterilization Service (CSS). The first configuration is
referred to as ‘‘distributed sterilization service’’; the second one is
referred to as ‘‘centralized sterilization service’’. The centralization
could lead to better resource utilization and considerable cost
savings through the advantage of economy of scale. However,
this alternative can be considered only if the different hospitals
are located in the same region as well as the sterilization centre
and incurs transportation costs. Moreover, sterilization service
centralization increases the risk of sterile item unavailability. That
is why it requires a high level of management to ensure the
coordination and the satisfaction of all the network actors. Reaping
the benefits of a centralized sterilization service is contingent to an
effective and efficient management at the tactical and operational
levels.
The focus of this paper is placed on finding the best choice be-
tween the two alternatives concerning the configuration of the
sterilization service within a hospital network: (1) a distributed
sterilization service; (2) a centralized sterilization service. If the
second alternative is chosen, the common sterilization service
location and sizing are also determined. The objective is to
minimize the total cost of sterilization service which includes the
transportation cost, the sterilization process cost and the resource
transfer and acquisition costs. The constraints that have been taken
into account are essentially related to resource capacities and de-
mand satisfaction. This multi-site, multi-product and multi-period
planning horizon, location–allocation problem, is formulated as a
Mixed Integer Linear Program (MILP).
The remainder of this paper is organized as follows: Sec-
tion 2 presents a brief literature review on hospital network
location–allocation problems. In Section 3, the optimization prob-
lem and the considered assumptions are described. Furthermore,
the proposed mathematical model is presented. Section 4 details
the proposed solution approach. Computational experiments and
results are reported in Section 5. The last section highlights some
conclusions; future extensions of this work are also discussed.
2. Literature review
Some researchers have been investigating whether mergers
and networks should take the place of independent operations,
focusing on hospitals’ quest for better location, optimal resource
dimensioning and improvement of the healthcare service and
reduction of total health expenditure [5–8], etc. Other researchers
have focused on the consequences of mergers and networking in
terms of benefits versus drawbacks [1,9,10], etc.
Location–allocation models have been used quite extensively
for quantitative analysis in health services. The common ob-
jective is to minimize travel costs. Classical mathematical lo-
cation–allocation models like p-median or maximum covering
location models have been proposed [11]. Rahman and Smith [12]
reviewed a number of location–allocation studies for health ser-
vice development planning and found that most of the loca-
tion–allocation models and methods have been formulated either
as p-median problems or covering problems.
Some studies have dealt with the location–allocation problem
in hospital network organization and have reported a particu-
lar interest in the considered configuration problem. Or and Pier-
skalla [6] treated the transportation–location–allocation problem
regarding the case of regional blood banking. They suggested algo-
rithms to decide how many banks to set-up, where to locate them,
how to allocate the hospitals to the banks and how to root the sup-
ply operations in such a way that the transportation and system
costs are minimized. In [7], a multi-objective heuristic approach
has been developed for determining the location and the size of
medical departments in a hospital network. The authors aimed to
minimize the patient travel cost, the total cost incurred by the lo-
cation–allocation plan and the total number of unit moves neces-
sary for the restructuring of the new allocation. They proposed a
two-phased solution procedure to solve the proposed mathemat-
ical model. This approach sought efficient solutions by means of
multi-objective Tabu Search in the first phase. In the second phase,
they proposed clustering to allow the decision makers to explore
the solution space interactively until the ‘‘optimal’’ configuration
was found. Gunes and Yaman [8] studied the modelling change in
healthcare networks with particular reference to the implication
on patient flows and resource allocation. They also modelled hospi-
tal mergers at a facility planning level using a resource-based view
of hospitals. Their objective was to find the optimal resource allo-
cation after a merger of two networks. They focused on the gains
in network design and flow related costs.
Few studies have considered stochastic aspects while modelling
and solving location–allocation problems in the case of healthcare
systems. Chao [13] used a non-linear programming approach to
study the allocation of a limited amount of service capacity to
different service sites in such a way that the system-wide quality
is optimized. Harper [14] proposed a simulation tool for use in
planning health services when geographical considerations (both
service and patient locations) are of prime importance.
Some other works have investigated the sterilization service de-
partment configuration problem. In the first study, Elshafei [15]
proposed a mathematical model to find the location of a set of
central sterilization services within a hospital network. A survey
dealing with the feasibility of the sterilization service centraliza-
tion in the French context has been conducted by a group of con-
sultants. This study aimed at understanding the organizational
aspects of a common centralized sterilization service and finding
the best way to group hospital sterilization departments within
the region under consideration for optimal functioning of this ser-
vice [4]. This survey was based on an estimation of the steriliza-
tion service cost; no optimization models have been used. A study
conducted in Switzerland [16] dealt with the development of an
integrated logistics solution to ensure optimal sterilization for a
hospital network. This study stressed on the great need of health
care decision makers to improve hospital sterilization service, as
a response to the pressure on costs in the field of public health.
These observations let indeed many hospitals to consider the op-
tion of building a new CSS with greater capacity to serve attached
hospitals working as a network.
In [17], we addressed the problem of the centralization vs.
decentralization of the sterilization service within a hospital: the
case of a Tunisian hospital where many surgical services were
located in different wings, with each surgical service having its
own sterilization department. A two-stepped iterative approach
solution was proposed. The first step consisted of finding the
best configuration between the centralization and decentralization
of the various sterilization service departments; in the second
step we aimed to find the optimal size for the configuration
achieved in the first step. The developed approach did not take
into account demand and cost variation over the planning horizon.
In addition, sterilization service location–allocation and resource
dimensioning are addressed separately.
In [18], we proposed a model for finding the optimal choice
between the internalization vs. externalization of the hospital
sterilization process. In the externalization case, two types of third-
party providers have been considered: (1) an industrial company
 H. Tlahig et al. / Operations Research for Health Care 2 (2013) 75–85
and (2) a hospital located in the same region. The proposed model
considered all the sterilization process activities and took into
account the variation in demand and cost from one period to
another.
In both [17,18], the emphasis was placed on optimizing the
costs incurred by sterilization activity of one hospital. The decision
is made by the management of the hospital under consideration.
However, it has been noted that many hospitals located in the same
country region could have a need to optimize their sterilization
activity. Optimizing sterilization activity separately for each
hospital overlooks the opportunities of better employment of
scarce and costly resources that could be grasped when this
optimization integrates all the hospitals. Optimizing sterilization
activity within a hospital network is besides encouraged by the
significant cost disparities mentioned above. In France, such a
decision is made by Regional Healthcare Agencies which mission
includes the improvement of healthcare systems efficiency within
each region of the country.
To the best of our knowledge, there have been no studies deal-
ing with the choice between the centralized vs. distributed ster-
ilization service in a hospital network using optimization tools.
There have been papers dealing with the location–allocation prob-
lem in healthcare systems but without integrating resource di-
mensioning. In [19], the authors addressed the optimization of the
sterilization costs through the grouping choices of medical devices
into packages. They developed an Integer Linear Program defin-
ing the items grouped in each package. They showed how group-
ing choices impact process and storage costs of the sterilization
activity. In [3], the authors developed optimization models to sup-
port sterilization logistics. They defended the option of maintain-
ing in-house sterilization against outsourcing sterilization tasks.
Hospitals are opting for outsourcing as an attempt to achieve cost
savings. However, placing the sterilization service at a distance
entails the risks of lowering sterile item availability which could
increase costs rather reducing them. That is why the authors are
rather promoting the idea of reducing in-house sterilization cost by
optimizing sterilization logistics and the composition of the nets of
sterile items.
In the present paper, we rather embrace the idea that first
we need to optimize the sterilization service configuration within
a hospital network; then adequate management tools will be
developed and implemented to deal with operational decisions
in order to minimize the risk of sterile item unavailability and
reach the intended objectives in terms of cost reduction. Hence,
we address the optimization of hospital sterilization cost through
the configuration of the sterilization services within a hospital
network. Two options are considered: (1) distributed sterilization
service; (2) centralized sterilization service. A location–allocation
model is proposed; in the model, resource capacity dimensioning
is also integrated, in that we specify the number of resources to be
transferred from the hospitals to the CSS.
3. Model formulation
3.1. Problem description
In this paper, centralization can be defined as the process by
which hospitals within a given geographical area move towards
sharing the existing sterilization resources leading to a CSS.
In our study, we consider a network composed of N hospitals for
which it may be beneficial to group their sterilization services into
a common CSS. Our objective is to find the optimal configuration
between the centralized vs. distributed sterilization service and
to determine the CSS location. Indeed the CSS may be located in
a separate new entity or located in one of the hospitals under
consideration.
77
The sterilization service must ensure Reusable Medical Devices
(RMD) sterility which is obtained through a high-quality regulated
closed loop process. The most important point of consumption of
the sterile instruments is the operating room. When a surgery is
finished, all materials will be brought to the contaminated storage
of the OR, from where they are taken to the sterilization service.
There, they are dismounted, disinfected, perhaps precleaned, and
subsequently put into the washing machines. After washing, the
RMD are grouped into sets and packaged. There are many types of
packaging systems such as wrapping and rigid sterile containers.
The packages are put into the autoclaves where the sterilization
takes place. Once sterilized, the packages are placed in the sterile
storage which completes the closed loop.
Many human and material resources are required to perform
the sterilization activity. The human resources fully assigned to
the sterilization service department are the technicians and the
sterilization nurses. The technicians are responsible for instrument
cleaning and disinfection; sterilization nurses are responsible for
instrument packaging and the control of the sterilization process.
Other human resources intervene in the sterilization service
department, such as a pharmacist and an administrator, but they
are assigned concurrently to other activities and responsibilities
in the hospital. Several equipments and fixtures are used in the
sterilization process: autoclaves, automatic washing machines,
shelves, carts, etc. The most costly and critical material resources
are autoclaves and automatic washing machines.
Sterilization service configuration within the hospital network
seeks to find the best location and allocation of the existing critical
hospital resources to the CSS. Henceforth, in network configura-
tion, human and material resources required for the CSS are deter-
mined while taking into account sterilization process specificities.
In the mathematical formulation, decision variables are related
to the choice between the centralized vs. distributed configuration,
the location of the common sterilization service, the quantities of
Sterilized Medical Devices (SMD) to be produced for each hospital,
the number of resources to be transferred from each hospital to
the CSS and the number of vehicle to be purchased as well. If the
centralization is the chosen configuration, supply is carried out
by the CSS and deliveries are achieved using available vehicles.
The departure point for each vehicle is the CSS. Each vehicle has
a known capacity. The objective is to minimize sterilization costs
composed of sterilization fixed and variable costs, transportation
costs, transfer costs and storage costs.
3.2. Assumptions
In problem formulation, the following assumptions have been
considered:
• The potential locations of the CSS are known (existing hospitals
as well as potential new locations).
• We consider only one CSS for all the network hospitals.
• The delivery costs are treated as variable costs and depend on
the distance between the hospital and the CSS location.
• The delivery vehicles belong to the CSS.
• The sterilization service requires a set of human and material
resources (nurses, autoclaves, etc.). Each resource has a given
capacity to produce SMD.
• The transfer costs for the material resources depend on the
distance between each hospital and the CSS. The transfer costs
for human resources are represented by the remuneration
paid to each nurse/technician whose post changes [8]. This
remuneration depends on the distance between the hospital
where the nurse is currently working and the CSS.
• We do not consider layoff costs. Each nurse/technician is
supposed to be transferred either to the CSS or to another
service in his/her original hospital.
78 H. Tlahig et al. / Operations Research for Health Care 2 (2013) 75–85
• At this stage, we consider that non-transferred material
resources are sold.
• We consider that if the decision to move to a CSS is made over a
given period, it will remain the same for the upcoming periods
of the planning horizon.
• The decision on the location of the sterilization service involves
all the hospitals in the network: all the considered hospitals
have to make the same decision on choosing between a
centralized and a distributed organization.
• The initial inventory levels are considered equal to zero.
• Inventory levels at the CSS are not considered. As soon as
sterilization has been completed, the SMDs are transferred to
the appropriate hospital.
• The demand is considered to be deterministic and is based on
historical data on demand of the operating room activity.
3.3. Notations
The following sets and indices are used in formulating the
considered optimization problem.
H = {H1 , H2 , . . . , HN } = {set of considered hospitals}.
S = {CSS1 , CSS2 , . . . , CSSN +M } = {set of potential locations of
the CSS}.
We can notice here that H ⊂ S as the CSS could be located in
one of the hospitals within the network.
P: number of products.
T : number of planning horizon periods.
R: number of material resources.
W : number of human resources.
N: number of hospitals in the network.
M: number of potential new sites.
M1 , M2 , M3 , M4 : large numbers.
i: hospitals, i = 1 . . . N.
j: potential locations of the CSS, j = 1 . . . N + M.
p: products, p = 1 . . . P.
t: periods, t = 1 . . . T .
r: material resource types, r = 1 . . . R.
w : human resource types, w = 1 . . . W .
We consider the following parameters:
Ctransp,i,j,t Transportation cost of one unit of product p, p =
1 . . . P, between hospital i, i = 1 . . . N, and CSS j, j =
1 . . . N + M, during period t , t = 1 . . . T (in euro/unit).
CAPV Transportation capacity of one vehicle (in m3 ).
QMr ,i Number of material resources of type r , r = 1 . . . R, ini-
tially available at hospital i, i = 1 . . . N.
QHw,i Number of human resources of type w, w = 1 . . . W , ini-
tially working at hospital i, i = 1 . . . N.
Dp,i,t Demand of hospital i, i = 1 . . . N, for product p, p =
1 . . . P, during period t , t = 1 . . . T (in units).
CVp,j,t Variable processing cost of one unit of product p, p =
1 . . . P, when it is performed in the CSS j, j = 1 . . . N + M,
during period t , t = 1 . . . T (in euro/unit).
CVHp,i,t Variable processing cost of one unit of product p, p =
1 . . . P, when it is performed in hospital i, i = 1 . . . N,
during period t , t = 1 . . . T (in euro/unit).
CSp,i,t Storage cost of product p, p = 1 . . . P, at hospital i, i =
1 . . . N, during period t , t = 1 . . . T (in euro/unit).
CFj,t Fixed cost associated with the use of CSS j, j = 1 . . . N +
M, during period t , t = 1 . . . T .
CFMrj,t Fixed cost associated with the use of one material re-
source of type r , r = 1 . . . R, at CSS j, j = 1 . . . N + M
during period t , t = 1 . . . T .
CFHwj,t Fixed cost associated with the utilization of human re-
source of type w, w = 1 . . . W , at CSS j, j = 1 . . . N + M,
during period t , t = 1 . . . T .
CFHi,t Fixed cost associated with the use of the sterilization de-
partment of hospital i, i = 1 . . . N, during period t , t =
1 . . . T.
CFHMr ,i,t Fixed cost associated with the use of one material re-
source of type r , r = 1 . . . R, at the sterilization depart-
ment of hospital i, i = 1 . . . N, during period t , t =
1 . . . T.
CFHHw,i,t Fixed cost associated with the utilization of human re-
source of type w, w = 1 . . . W , at the sterilization de-
partment of hospital i, i = 1 . . . N, during period t , t =
1 . . . T.
CRr ,i,j,t Transfer cost of material resource of type r , r = 1 . . . R,
from hospital i, i = 1 . . . N, to CSS j, j = 1 . . . N + M, at
the beginning of period t , t = 1 . . . T .
CTw,i,j,t Transfer cost incurred of human resource of type w, w =
1 . . . W , from hospital i, i = 1 . . . N, to CSS j, j = 1 . . . N,
at the beginning of period t , t = 1 . . . T .
CAVt Purchasing cost of a vehicle at the beginning of period
t, t = 1 . . . T .
I0p,i Initial inventory level of product p, p = 1 . . . P, at hospi-
tal i, i = 1 . . . N (in units).
ISp,i,t Safety stock level of product p, p = 1 . . . P, at hospital
i, i = 1 . . . N, at the end of period t , t = 1 . . . T (in unit).
CAPMr Capacity of one material resource of type r , r = 1 . . . R
(in m3 ).
CAPHw Capacity of one human resource of type w, w = 1 . . . W
(in time units).
v r ,i ,t Income of selling one material resource of type r , r =
1 . . . R, belonging to hospital i, i = 1 . . . N, at the begin-
ning of period t , t = 1 . . . T .
Vp Volume of one unit of product p, p = 1 . . . P (in m3 ).
δw,p Number of time units of human resource of type w, w =
1 . . . W , required to produce one unit of product p, p =
1 . . . P.
The following decision variables are used:
Zi,t = 1 If sterilization service is performed in-house, in hospital
i, i = 1 . . . N, during period t , t = 1 . . . T ; = 0 other-
wise.
Yi,j,t = 1 If sterilization service of hospital i, i = 1 . . . N, is per-
formed in CSS j, j = 1 . . . N + M, during period t , t =
1 . . . T ; = 0 otherwise.
Xp,i,j,t Number of units of product p, p = 1 . . . P, of hospital
i, i = 1 . . . N, processed in CSS j, j = 1 . . . N + M, during
period t , t = 1 . . . T .
XHp,i,t Number of units of product p, p = 1 . . . P, of hospital
i, i = 1 . . . N, processed in-house during period t , t =
1 . . . T.
Ip,i,t Inventory level of product p, p = 1 . . . P, at hospital i,
i = 1 . . . N, at the end of period t , t = 1 . . . T .
TRMr ,i,j,t Number of material resources of type r , r = 1 . . . R,
relocated from hospital i, i = 1 . . . N, to CSS j, j =
1 . . . N + M, at the beginning of period t , t = 1 . . . T . In
case of centralization at period k, TRMr ,i=j,j,k ̸= 0.
VRMr ,i,j,t Number of material resources of type r , r = 1 . . . R, re-
located from hospital i, i = 1 . . . N, to CSS j, j = 1 . . . N +
M, before or at the beginning of period t , t = 1 . . . T . In
case of centralization at period k, VRMr ,i=j,j,t ≥k ̸= 0.
TRHw,i,j,t Number of human resources of type w, w = 1 . . . W ,
transferred from hospital i, i = 1 . . . N, to CSS j, j =
1 . . . N + M, at the beginning of period t , t = 1 . . . T . In
case of centralization at period k, TRHw,i=j,j,k ̸= 0.
 H. Tlahig et al. / Operations Research for Health Care 2 (2013) 75–85 79

VRHw,i,j,t Number of human resources of type w, w = 1 . . . W , Each hospital has to choose between the two options: (1) perform-
transferred from hospital i, i = 1 . . . N, to CSS j, j = ing the sterilization ‘‘in-house’’ or (2) sharing the sterilization ser-
1 . . . N + M, before or at the beginning of period t , t = vice with the hospitals of the network:
1 . . . T . In case of centralization at period k, VRHw,i=j,j,t ≥k Yi,j,t ≤ Yi,j,t +k ∀j = 1 . . . N + M , ∀i = 1 . . . N ,
̸= 0.
AVj,t Number of new vehicles required by CSS j, j = 1 . . . N + ∀t = 1 . . . T , ∀k = 1 . . . T − t . (2)
M, at the beginning of period t , t = 1 . . . T . Constraints (2) ensure that if the centralized configuration is
CAPtransj,t Transportation capacity of CSS j, j = 1 . . . N + M, dur- chosen at period t, this decision should be maintained for the
ing period t , t = 1 . . . T (in m3 ). upcoming periods of the planning horizon:
CAPMr ,j,t Capacity of material resources of type r , r = 1 . . . R, at Yi,j,t ≤ Yi′ ,j,t ∀j = 1 . . . N + M , ∀t = 1 . . . T ,
the CSS j, j = 1 . . . N + M, during period t , t = 1 . . . T
(in m3 ) ∀i = 1 . . . N , ∀i′ = 1 . . . N /i′ ̸= i. (3)
CAPHw,j,t Capacity of human resources of type w, w = 1 . . . W , Constraints (3) state that only one CSS is considered. If centraliza-
at the CSS j, j = 1 . . . N + M, during period t , t = 1 . . . T tion is chosen for one hospital sterilization service then this deci-
(in time units). sion will be applied for the other hospitals within the network. In
NMr ,i,t Number of material resources of type r , r = 1 . . . R, of this case, all network hospitals will be assigned to only one shared
hospital i, i = 1 . . . N, sold at the beginning of period CSS:
t, t = 1 . . . T . P
 N

Xp,i,j,t · Vp ≤ CAPtransj,t ∀j = 1 . . . N + M ,
p=1 i=1,i̸=j
3.4. Mathematical model
∀t = 1 . . . T . (4)
The objective is to minimize the total cost of the sterilization Constraints (4) ensure the respect of the transportation capacity:
service which is composed of the delivery cost, the production
N 
P
cost (both fixed and variable costs are considered), the storage 
Xp,i,j,t · Vp ≤ CAPMr ,j,t ∀j = 1 . . . N + M ,
cost, the purchase cost of new resources (vehicles) needed by the
i=1 p=1
CSS, the cost incurred by relocating and transferring some existing
∀t = 1 . . . T , ∀r = 1 . . . R (5)
resources (autoclaves, nurses, technicians, etc.) and to maximize
N P
cost savings made by selling unused material resources and by 
the redeployment of human resources to other services of the Xp,i,j,t · δw,p ≤ CAPHw,j,t ∀j = 1 . . . N + M ,
considered hospitals. i=1 p=1

The MILP can be modelled as follows: ∀t = 1 . . . T , ∀w = 1 . . . W


T N N +M 
P
   P
Min Ctransp,i,j,t · Xp,i,j,t

XHp,i,t · Vp ≤ QMr ,i · CAPMr ∀i = 1 . . . N ,
t =1 i=1 j=1 p=1
p=1
∀r = 1 . . . R, ∀t = 1 . . . T (5′ )
  
N
 P

+ CVHp,i,t · XHp,i,t + CFHi,t P

XHp,i,t · δw,p ≤ QHw,i · CAPHw ∀i = 1 . . . N ,
i=1 p=1
 
R
 W
 p=1
+ CFHMr ,i,t · QMr ,i + CFHHw,i,t · QHw,i · Zi,t ∀w = 1 . . . W , ∀t = 1 . . . T .
r =1 w=1
   Constraints (5) state that the quantity of DMS produced in the
N +M 
N P
  Yi,j,t CSS should respect the available resource capacities. Constraints
+ CVp,j,t · Xp,i,j,t + CFj,t · (5′ ) express that the quantity of DMS produced in each hospital
j =1 i=1 p=1
N
 when the in-house option is chosen are limited by the available
R
 W
 resource capacities:
+ CFMr ,j,t · VRMr ,i,j,t + CFHw,j,t · VRHw,i,j,t
Xp,i,j,t ≤ M1 · Yi,j,t ∀i = 1 . . . N , ∀j = 1 . . . N + M ,
r =1 w=1
N 
 P N +M
 ∀p = 1 . . . P , ∀t = 1 . . . T (6)
+ CSp,i,t · Ip,i,t + CAVt · AVj,t
i=1 p=1 j=1
XHp,i,t ≤ M1 · Zi,t ∀i = 1 . . . N ,
W 
 N N
 +M
  ∀p = 1 . . . P , ∀t = 1 . . . T . (6′ )
+ CTw,i,j,t · TRHw,i,j,t Constraints (6) impose that production is allowed in the CSS only
w=1 i=1 j=1 in case of centralization. Constraints (6′ ) are similar to constraints
(6); they deal with the case of distributed configuration. M1 can be
 
R 
 N N
 +M
+ CRr ,i,j,t · TRMr ,i,j,t − vr ,i,t · NMr ,i,t . set to the biggest demand during the considered time horizon.
r =1 i=1 j=1 N +M

Subject to Ip,i,t = Ip,i,t −1 + XHp,i,t + Xp,i,j,t − Dp,i,t
j =1
N +M
 ∀i = 1 . . . N , ∀t = 2 . . . T , ∀p = 1 . . . P (7)
Zi,t + Yi,j,t = 1 ∀i = 1 . . . N , ∀t = 1 . . . T . (1)
N +M
j =1

Ip,i,1 = I0p,i + XHp,i,1 + Xp,i,j,1 − Dp,i,1
These constraints are related to the choice of distributed vs. cen- j =1
tralized sterilization service for the considered hospital network. ∀i = 1 . . . N , ∀p = 1 . . . P .
80 H. Tlahig et al. / Operations Research for Health Care 2 (2013) 75–85

Constraints (7) define the inventory level at each hospital of the available material resources and M4 can be set to the maximum
network at the end of a given period t as a function of inventory number of available human resources
level at the end of period t − 1, the sterilized quantities performed
  
VRMr ,i,j,t +1 ≤ TRMr ,i,j,t +1 + M3 · 1 − Yi,j,t +1 − Yi,j,t (14)
during period t (whether the sterilization is performed in-house
or in a CSS) and of the demand fulfilled during period t. Obviously VRMr ,i,j,t +1 ≥ TRMr ,i,j,t +1 ∀t = 1 . . . T − 1,
these constraints are related to flow conservation: ∀i = 1 . . . N , ∀r = 1 . . . R, ∀j = 1 . . . N + M
 
VRMr ,i,j,1 ≤ TRMr ,i,j,1 + M3 · 1 − Yi,j,1
Ip,i,t ≥ ISp,i,t ∀i = 1 . . . N , ∀t = 1 . . . T , ∀p = 1 . . . P . (8)
VRMr ,i,j,1 ≥ TRMr ,i,j,1 ∀i = 1 . . . N ,
Constraints (8) imply that the stored quantities must be greater ∀r = 1 . . . R, ∀j = 1 . . . N + M
than or equal to the corresponding safety stock level:   
VRHw,i,j,t +1 ≤ TRHw,i,j,t +1 + M4 · 1 − Yi,j,t +1 − Yi,j,t
VRHw,i,j,t +1 ≥ TRHw,i,j,t +1 ∀t = 1 . . . T − 1,
N

CAPMr ,j,t = CAPMr · VRMr ,i,j,t ∀i = 1 . . . N , ∀w = 1 . . . W , ∀j = 1 . . . N + M
i=1
∀j = 1 . . . N + M , ∀t = 1 . . . T , ∀r = 1 . . . R
 
(9) VRHw,i,j,1 ≤ TRHw,i,j,1 + M4 · 1 − Yi,j,1
N
 VRHw,i,j,1 ≥ TRHw,i,j,1 ∀i = 1 . . . N ,
CAPHw,j,t = CAPHw · VRHw,i,j,t ∀w = 1 . . . W , ∀j = 1 . . . N + M .
i =1
Constraints (14) define the number of material resources to be
∀j = 1 . . . N + M , ∀t = 1 . . . T , ∀w = 1 . . . W .
relocated and the number of human resources to be transferred
Constraints (9) ensure that the capacity of the CSS is equal to the from each hospital to the CSS:
sum of the capacity of all transferred resources from hospitals of 
TRMr ,i,j,t +1 ≤ QMr ,i · Yi,j,t +1 − Yi,j,t ∀t = 1 . . . T ,

the considered network to the CSS:
∀j = 1 . . . N + M , ∀i = 1 . . . N , ∀r = 1 . . . R (15)
t
 TRMr ,i,j,1 ≤ QMr ,i · Yi,j,1 ∀j = 1 . . . N + M ,
CAPtransj,t = CAPV · AVj,k ∀j = 1 . . . N + M . (10)
∀i = 1 . . . N , ∀r = 1 . . . R
k =1
N +M

Constraints (10) determine the transportation capacity of the CSS ∀t = 1 . . . T − 1,

NMr ,i,t +1 ≤ QMr ,i · Yi,j,t +1 − Yi,j,t
as a function of the total number of purchased vehicles: j =1

T N +M
∀i = 1 . . . N , ∀r = 1 . . . R
 
QMr ,i ≥ (TRMr ,i,j,t + NMr ,i,t ) N +M

t =1 j=1 NMr ,i,1 ≤ QMr ,i · Yi,j,1 ∀i = 1 . . . N ,
∀i = 1 . . . N , ∀r = 1 . . . R (11) j =1

T N +M
∀r = 1 . . . R
 
(TRMr ,i,j,t + NMr ,i,t + M2 · (1 − Yi,j,t )) ∀t = 1 . . . T − 1,
 
QMr ,i ≤ TRHw,i,j,t +1 ≤ QHw,i · Yi,j,t +1 − Yi,j,t
t =1 j=1 ∀j = 1 . . . N + M , ∀i = 1 . . . N , ∀w = 1 . . . W
∀i = 1 . . . N , ∀r = 1 . . . R.
TRHw,i,j,1 ≤ QHw,i · Yi,j,1 ∀j = 1 . . . N + M ,
Constraints (11) specify that the number of material resources ∀i = 1 . . . N , ∀w = 1 . . . W .
relocated from one hospital to the CSS added to the number of Constraints (15) ensure that if the centralization option is chosen
sold ones must be equal to the number of these resources initially at period t, then the number of resources needed by the CSS should
available in the considered hospital: be transferred once at the beginning of that period:

VRMr ,i,j,t ≤ QMr ,i · Yi,j,t ∀t = 1 . . . T , Yi,j,t ∈ {0, 1} ∀i = 1 . . . N , ∀j = 1 . . . N + M , ∀t = 1 . . . T (16)

∀j = 1 . . . N + M , ∀i = 1 . . . N , ∀r = 1 . . . R (12) Zi,t ∈ {0, 1} ∀i = 1 . . . N , ∀t = 1 . . . T
VRHw,i,j,t ≤ QHw,i · Yi,j,t ∀t = 1 . . . T , TRMr ,i,j,t ≥ 0 ∀i = 1 . . . N , ∀j = 1 . . . N + M ,
∀j = 1 . . . N + M , ∀i = 1 . . . N , ∀w = 1 . . . W . ∀r = 1 . . . R, ∀t = 1 . . . T (17)

Constraints (12) express that resources (material as well as human TRHw,i,j,t ≥ 0 ∀i = 1 . . . N , ∀j = 1 . . . N + M ,

resources) are transferred from hospital i to the CSS only if the
centralization option is chosen:
 
VRMr ,i,j,t ≥ VRMr ,i,j,t +k − M3 · 1 − Yi,j,t
VRMr ,i,j,t ≤ VRMr ,i,j,t +k ∀t = 1 . . . T ,
∀i = 1 . . . N , ∀r = 1 . . . R,
∀j = 1 . . . N + M , ∀k = 1 . . . T − t
 
VRHw,i,j,t ≥ VRHw,i,j,t +k − M4 · 1 − Yi,j,t
VRHw,i,j,t ≤ VRHw,i,j,t +k ∀t = 1 . . . T , ∀i = 1 . . . N ,
∀w = 1 . . . W , ∀j = 1 . . . N + M ,
∀k = 1 . . . T − t .
Constraints (13) specify that if the centralization option is retained,
the number of human and material resources required at the CSS
is constant from the period of the centralization until the end of
the considered horizon. M3 can be set to the maximum number of
∀w = 1 . . . W , ∀t = 1 . . . T
VRMr ,i,j,t ≥ 0 ∀i = 1 . . . N , ∀j = 1 . . . N + M ,
∀r = 1 . . . R, ∀t = 1 . . . T
(13)
VRHw,i,j,t ≥ 0 ∀i = 1 . . . N , ∀j = 1 . . . N + M ,
∀w = 1 . . . W , ∀t = 1 . . . T
AVj,t ≥ 0 ∀j = 1 . . . N + M , ∀t = 1 . . . T
CAPMr ,j,t ≥ 0 ∀j = 1 . . . N + M , ∀r = 1 . . . R, ∀t = 1 . . . T
CAPHw,j,t ≥ 0 ∀j = 1 . . . N + M , ∀w = 1 . . . W , ∀t = 1 . . . T
NMr ,i,t ≥ 0 ∀i = 1 . . . N , ∀r = 1 . . . R, ∀t = 1 . . . T
CAPtransj,t ≥ 0 ∀j = 1 . . . N + M , ∀t = 1 . . . T
Xp,i,j,t ≥ 0 ∀i = 1 . . . N , ∀j = 1 . . . N + M ,
∀p = 1 . . . P , ∀t = 1 . . . T (18)
XHp,i,t ≥ 0 ∀i = 1 . . . N , ∀p = 1 . . . P , ∀t = 1 . . . T
Ip,i,t ≥ 0 ∀i = 1 . . . N , ∀p = 1 . . . P , ∀t = 1 . . . T .
 H. Tlahig et al. / Operations Research for Health Care 2 (2013) 75–85
Constraints (16)–(18), respectively, specify binary, integer and
positive decision variables.
4. Solution method
In this paper, we are proposing to investigate the resolution of
the proposed MILP by commercial solvers which are increasingly
known for their power to solve these kinds of mathematical
models. More precisely, we propose here to implement and solve
our model with the solver IBM ILOG CPLEX 12.2.
Obviously, the first solution method that we are proposing to
examine consists in the proprietary branch and bound algorithm
used by the solver. Some cuts (such as Gomory fractional cuts
or flow cuts, etc. [20]) are automatically generated by the solver.
In this case, the obtained solution will be referred to as ‘‘default
settings solution’’.
Besides, the solver can be configured to aggressively generate
the cuts that could speed up the resolution. Furthermore, specific
valid cuts can be directly added to strengthen the model formu-
lation. These cuts generally permit the speeding up of the resolu-
tion by ‘‘cutting’’ away regions that contain no feasible solutions
[21,22]. In the following, we propose to consider some valid cuts
related to capacity dimensioning. These cuts will be referred to as
customized cuts and are defined by Eqs. (19) and (20).
Cuts based on the minimum number of material resources:
N
 service configuration; it depends on the volume of the sterilized
CAPMr · VRMr ,i,j,t
i=1
 
N 
P
 cost of building is amortized over 20 years, the cost of equipment
≥ Min Dp,i,t · Vp · Yi,j,t
t =1...T
i=1 p=1
∀r = 1 . . . R, ∀j = 1 . . . N + M , ∀t = 1 . . . T .
Cuts based on the minimum number of human resources required:
N
 will be used by other hospital’s services; equipments will be either
CAPHw · VRHw,i,j,t
i=1
 
N 
 P
≥ Min Dp,i,t · δw,p · Yi,j,t
t =1...T
i=1 p=1
∀w = 1 . . . W , ∀j = 1 . . . N + M , ∀t = 1 . . . T .
Cuts (19) calculate the minimum number of material resources (for
instance the minimum number of autoclaves) required to satisfy
the total network demand. Cuts (20) are similar to cuts (19) as
they define the minimum number of human resources necessary
to ensure the total network demand.
First, we propose to solve the MILP using CPLEX default settings
while enabling automatic cut generation. We note the cuts mostly
used in the first resolution. Then, we solve the MILP while using
aggressive settings for the generation of these cuts. Third, in addi-
tion to aggressive settings for cut generation, we integrate in the
model the proposed customized cuts. The objective is to point out
the interest of using CPLEX parameter settings and customized cuts
in order to speed up the resolution of the considered combinatorial
optimization problem. Even if most location–allocation models are
defined as NP-hard optimization problems [23], we propose first to
examine optimal settings solutions.
5. Experimentation and results
In order to evaluate the proposed mathematical model,
probable scenarios, for a case based on real life situations within
a hospital network environment are developed and tested. Each
scenario is characterized by the number of hospitals in the network
81
and the demand. All scenarios are based on a real case study in
France: a nine-hospital network located in the same region [4].
The transportation time between any couple of hospitals or any
hospital and the CSS is less than 1 h. 6 hospitals are located
in Grenoble (H1 , H2 , H3 , H4 , H5 and H6 ), and 3 hospitals are
located in Chambéry (H7 , H8 and H9 ). In addition to the nine
hospitals, the CSS may be located in a new site. Five-year planning
horizon is considered (the period is the year). Two types of human
resources essential to the completion of sterilization activity are
considered: technicians (HR1) and sterilization nurses (HR2). Two
material resources are taken into account: autoclaves (MR1) and
automatic washing machines (MR2). The demand of each hospital,
fixed costs, the number of available resources in each hospital,
material resource costs, vehicle cost were extracted from [4]. Two
products are considered: full-sized and half-sized standardized
reusable rigid containers. All surgical instruments are supposed
to be placed in a standardized reusable rigid container for the
packaging, transportation and storage. Variable production costs
are estimated based on the previous studies dealing with cost
analysis of the sterilization process [24]. The work time needed
to process each product is extracted from [25]. Transportation
capacity is estimated under the assumption that a maximum of
3 trips are performed per one vehicle over one day. The capacity
of autoclave and automatic washing machine are determined on a
basis of 8 cycles a day.
Variable production cost is the same regardless of sterilization
item. The fixed costs are mostly incurred by personnel salaries,
building, furniture, equipments, maintenance and vehicles. The
is amortized over 10 years and the cost of a vehicle is amortized
over 3 years [4]. In the considered case study, the building and
(19) equipments of each hospital’s sterilization department are known
and will not be completely amortized over the five next years. In
case of centralization, the current in-house sterilization buildings
transferred to the CSS or sold. The cost estimation of CSS building is
based on the average daily volume of sterilized items. The used rule
states that 60 m2 surfaces are requested per m3 of daily sterilized
items [4]. Variable transportation cost of one item depends on the
distance between the hospital and the CSS and includes the pay of
truck driver and fuel cost.
(20)
First, 21 scenarios based on real life data are developed and
tested in order to investigate problem complexity and point out
the interest of using CPLEX aggressive settings for cut generation
and adding customized cuts. These scenarios are obtained from 7
basic scenarios: 3 scenarios consider groups of 3 hospitals, referred
to as 3-G1 (H1 , H2 and H3 ), 3-G2 (H4 , H5 and H6 ) and 3-C (H7 , H8
and H9 ); 3 scenarios consider groups of 6 hospitals referred to as
6-G12 (H1 , H2 , H3 , H4 , H5 and H6 ), 6-CG1 (H1 , H2 , H3 , H7 , H8 and
H9 ) and 6-CG2 (H4 , H5 , H6 , H7 , H8 and H9 ), each one is including
the hospitals of two of the previous three-hospital groups; and
one scenario considers the 9 hospitals (H1 , H2 , H3 , H4 , H5 , H6 , H7 ,
H8 and H9 ) and is referred to as 9-CG12. For each basic scenario
we examine several demand patterns: (a) constant demand;
(b) increasing demand and (c) decreasing demand.
The MILP generated by these scenarios are solved with IBM
ILOG CPLEX 12.2 on a PC Pentium IV, 3.0 GHz. The three solution
methods presented above are used. Default setting solution is
denoted by DSS, the solution method using aggressive settings for
cut generation is denoted by ASCG and the solution method using
both aggressive settings for cut generation and customized cuts is
denoted by ASCG + CC.
For scenarios 1–9 (considering three hospitals) the associated
MILPs comprise 886 variables, 3557 constraints and 80 customized
cuts can be added. For scenarios 10–18 (considering six-hospitals)
82 H. Tlahig et al. / Operations Research for Health Care 2 (2013) 75–85

Table 1
Computational results.
Scenario DP HG CPU1 CPU2 CPU3 Proposed configuration Z

1 a 136 33 2 Centralization at hospital H1 from period 1 9 649 145.59

2 b 3-G1 2 2 2 Decentralization 9 919 393.54
3 c 76 5 9 Centralization at hospital H1 from period 2 8 909 841.469
4 a 59 12 2 Centralization at hospital H4 from period 1 4 742 686.09
3 hospitals 5 b 3-G2 93 54 19 Centralization at hospital H4 from period 1 5 165 481.66
6 c 111 9 5 Centralization at hospital H4 from period 2 4 434 886.04
7 a 2 2 1 Centralization at hospital H8 from period 1 5 500 852.59
8 b 3-C 2 2 2 Centralization at hospital H8 from period 1 6 235 369.40
9 c 2 2 2 Centralization at hospital H8 from period 1 5 477 991.40
10 a 12 500a 13 340a 24 Centralization at hospital H1 from period 1 13 300 873.14
11 b 6-G12 12 025a 11 483a 37 039a Centralization at hospital H1 from period 2 15 512 824.77
12 c 14 440a 17 918a 495 Centralization at hospital H1 from period 2 12 639 863.66
13 a 3 094a 22 6 Centralization at hospital H1 from period 1 14 817 184.53
6 hospitals 14 b 6-CG1 12 017 48 51 Centralization at hospital H1 from period 1 16 970 642.68
15 c 36 46 24 Centralization at hospital H1 from period 1 14 753 397.14
16 a 749 32 20 Centralization at hospital H4 from period 1 9 857 890.64
17 b 6-CG1 61 41 14 Centralization at hospital H4 from period 1 11 531 690.44
18 c 6 920 48 28 Centralization at hospital H4 from period 1 9 818 769.83
19 a 1 162a 60 91 Centralization at hospital H1 from period 1 18 816 862.06
9 hospitals 20 b 9-CG12 9 037a 33 009a 13 358a Centralization at hospital H1 from period 1 21 692 793.42
21 c 1 501a 113 144 Centralization at hospital H1 from period 1 18 735 016.18
a
The obtained solution after the indicated computational time is not necessarily optimal (the solver is aborted).

the associated MILPs comprise 2731 variables, 12 074 constraints
and 140 customized cuts can be added. For scenarios 19 to 21
(considering 9 hospitals) the associated MILPs comprise 5566
variables, 26 441 constraints and 200 customized cuts can be
added.
Table 1 presents some computational results. For each scenario
the following information is provided: the hospital group (HG), the
demand pattern (DP), the proposed configuration and the value of
the objective function in euros (Z). In addition, for each solution
method, the computational time in seconds (CPU1 for DSS, CPU2
for ASCG and CPU3 for ASCG+CC) are reported.
For scenarios 1–9, regardless the used solution method, an
optimal solution is found very rapidly (in few seconds) for all
demand patterns. Based on the obtained results, we can state that
the resolution of the considered location–allocation problem is not
time consuming when a group of 3 hospitals is under investigation.
Problem complexity appears for networks including 6 and 9
hospitals as for the majority of these scenarios computing time has
exploded. However, it is clear that the use of aggressive settings for
cut generation and customized cuts could reduce resolution time
significantly and permits us to point out the optimal solution. The
use of cuts and particularly customized cuts permits us to solve
the MILP to optimality for 90% of the aforementioned scenarios.
For scenarios 10 and 12, the computational time is significantly
reduced only with the addition of the customized cuts.
Moreover, we note that for all scenarios, the three solution
methods provide the same solution. But, when default settings
solution method is used, the obtained solution is not identified as
optimal, adversely to the other solution methods (see for instance
scenario 13). This solution is often found after a short computing
time, but its optimality is not proven. When customized cuts are
used, the starting lower bound is higher which permit us to prove
solution optimality. This highlights the interest of developing
customized cuts and solver aggressive settings for cut generation
particularly for problems considering large networks. Finally, we
can note that computational time could vary widely depending on
demand pattern as shown for scenarios 10, 11 and 12.
For scenarios 7, 8, 9, 11, 13, 14, 15, 16, 17, 18, 19, 20 and 21,
a decentralized configuration is infeasible because some hospitals
of the network are under capacitated: some critical resources
in at least one hospital are not sufficiently available to meet
the demand. In scenario 7, for instance, the existing human
resources in hospital H8 are not able to satisfy the demand. With
centralization, it is not needed to hire additional resources. In
scenarios 3, 6 and 12, centralization is the optimal configuration
starting at period 2. We note that these scenarios are characterized
by a decreasing demand. Centralizing the sterilization services at
period 2 permits better optimization in resource sharing over the
upcoming periods (fewer resources are needed and transferred
to the CSS). In scenario 11, even though characterized by an
increasing demand, the centralization is proposed from period 2:
this indeed permits a better utilization of the transferred resources
with regard to a centralization starting from period 1. In scenario
2, with an increasing demand pattern, the optimal configuration
is the decentralization instead of the centralization obtained in
scenario 1, with a constant demand pattern. When the demand
increases, the utilization of available resources in each hospital
is improved; this justifies the interest for decentralization. In
addition, decentralization permits us to avoid transportation and
transferring costs.
Table 2 presents some details concerning the optimal config-
uration proposed for scenario 10. The number of the existing re-
sources available in each hospital of the network is presented. For
each hospital, the following information is provided: the number
of existing resources (# Exist.), the number of the resources to be
transferred to the CSS when the centralization is the retained con-
figuration (# Trans.).
For scenario 10 (as it has been shown previously in Table 1), the
centralization of the sterilization service represents the optimal
configuration from the first period of the planning horizon. The
CSS is located in hospital H1 . Indeed the demand of hospital H1
is much larger than the demand of the other hospitals. Locating
the CSS in hospital H1 incurs the smallest fixed cost and minimizes
transportation costs as well as transferring costs. We can remark
that the resource gain is of 22% for MR1, 71% for MR2, 64% for HR1
and 53% for HR2. A cost saving of 12% is also achieved with regard
to the current situation where all hospitals perform sterilization in-
house. The human resources that are not assigned to the CSS will
be redeployed in other hospital services. The material resources
which are not transferred to the CSS will be sold.
In the following, further analysis of the considered problem
is conducted. 9 scenarios are developed in order to examine the
impact of some parameters on the network design. In this analysis,
 H. Tlahig et al. / Operations Research for Health Care 2 (2013) 75–85 83

Table 2
Resource gain achieved by the optimal configuration based on scenario 10.
Hospital MR1 MR2 HR1 HR2
# Exist. # Trans. # Exist. # Trans. #Exist. #Trans. # Exist. #Trans.

H1 10 10 2 2 23 15 20 20
H2 1 0 1 0 3 0 5 0
H3 1 1 1 0 3 0 3 0
H4 3 3 1 0 5 0 6 0
H5 1 0 1 0 4 0 5 0
H6 2 0 1 0 4 0 4 0

Table 3
Obtained results for scenarios 22–30.
DP Proposed configuration Z

Scenario 22 a Centralization at hospital H1 from period 2 18 507 142.04

Scenario 23 b Centralization at hospital H1 from period 4 20 089 742.80
Scenario 24 c Centralization at hospital H1 from period 2 17 289 528.90
Scenario 25 a Centralization at hospital H1 from period 1 18 816 862.08
Scenario 26 b Decentralization 20 358 111.58
Scenario 27 c Centralization at hospital H1 from period 2 17 606 328.45
Scenario 28 a Centralization at hospital H1 from period 1 18 658 862.08
Scenario 29 b Centralization at hospital H1 from period 4 20 903 142.81
Scenario 30 c Centralization at hospital H1 from period 2 17 454 328.90

the 9 hospitals are considered. The generated MILPs are solved
using both aggressive settings for cut generation and customized
cuts. The obtained results for the 9 scenarios are reported in
Table 3.
Hospitals H7 , H8 and H9 are short of human resources to
meet their future internal demand. That is why the proposed
configuration for all networks including these hospitals was the
centralization. Subsequently, we propose first to examine the
impact of hiring additional human resources on the network
configuration. In scenarios 22, 23 and 24, the number of HR1 and
HR2 in H7 , H8 and H9 is modified in such a way that each hospital is
able to perform internally its sterilization activity for the first year
(we suppose that one HR2 is hired in H7 and H9 ; and one H1 and
one HR2 are hired in H8 ).
In case of hiring the mentioned human resources, the central-
ization starting at period 2 becomes the proposed configuration for
scenarios 22 and 24. In scenario 22, the produced quantity over the
first period must cover both the demand and the safety stock. Post-
poning the centralization to period 2 allows the transfer of fewer
resources to the CSS and guarantees a better utilization of these re-
sources over periods 2, 3, 4 and 5. For scenario 23, the centraliza-
tion starting at period 4 is the proposed configuration. This can be
explained again by the unavailability of human resources required
to cover the demand of periods 4 and 5.
Furthermore, the number of human resources was progres-
sively increased in order to point out configuration change. We
noted that with an increase of 12% in the number of human re-
sources, the centralization (at hospital 1 from period 1) becomes
the optimal configuration. This number of resources is used in sce-
narios 25, 26 and 27.
In scenario 26, the decentralization can be explained by the
increase of resource utilization notably over the last periods of
the planning horizon. Opting for the centralization in scenario 26
means that some resources are transferred to the CSS because
they are only needed to satisfy the demand of period 5; these
resources are not necessarily well utilized over the other periods
of the planning horizon.
We consider scenario 22 while progressively decreasing the
number of human resources in H1 . With a decrease ranging
between 2% and 21%, the decentralization is the optimal solution.
With a decrease larger than 21% (27% decrease in the number of
HR1 and 15% decrease in the number of HR2), H1 will not be able
to satisfy the demand in-house and the centralization starting at
period 1 becomes the optimal configuration.
The number of human resources available in each hospital has
an important impact on network configuration. Obviously, a num-
ber of human resources exceeding the requirements of sterilization
activity in each hospital favour centralization. Meanwhile a lack
of resources in any hospital of the network can be solved by cen-
tralization. But, in this case, centralization is not necessarily better
than opting for recruiting the requested resources as we can notice
while comparing scenarios 19 and 22.
Similarly to human resources, we propose to examine the im-
pact of the number of material resources on network configuration.
While maintaining the same number of human resources consid-
ered in scenario 22, the number of material resources was progres-
sively increased. We noted that with an increase of 64% of the total
number of MR1 and 30% of MR2, the centralization (at hospital 1
from period 1) becomes the optimal configuration. This number of
resources is used in scenarios 28, 29 and 30.
In scenario 22, the average utilization rate of MR1 is 75% and
the average utilization rate of MR2 is 27%. The centralization
becomes the optimal solution from period 1 when these rates
reach respectively, 47% and 21% (scenario 28). Postponing the
centralization to period 2 and 3 in scenario 29 and 30 is to ensure
better utilization of the transferred/shared resources.
We can conclude that network configuration is sensitive to
the number of material resources available in each hospital of
the network. The centralization is favoured by an increase of
resources’ number, adversely to the decentralization. Obviously,
decentralization will not be the proposed configuration if the
decrease generates a lack in resources so that one hospital will not
be able to satisfy its demand internally.
While considering scenario 22, we conducted a sensitivity
analysis study on some cost parameters. Firstly, we varied the
transportation cost. The proposed configuration changed only
when variable transportation costs were multiplied by 5.6:
decentralization becomes the optimal configuration. However,
any decrease in the transportation cost favours the centralization
at hospital H1 from period 2. The network configuration is not
sensitive to transportation cost. Secondly, we varied the fixed
cost of the CSS. This cost is primarily composed of the cost
of the building and its maintenance. With an increase of 5%,
decentralization becomes the optimal configuration. Nonetheless,
a decrease of CSS fixed cost does not have any effect on the
network configuration: centralization at hospital H1 from period
2 remains the proposed solution. The network configuration is
84 H. Tlahig et al. / Operations Research for Health Care 2 (2013) 75–85
very sensitive to CSS fixed cost. The estimation of this cost
must be made with accuracy. An error of 5% could mislead the
decision. Besides, we varied the fixed cost of in-house sterilization.
Similarly to CSS fixed cost, this cost is mainly composed of the
cost incurred by the building and its maintenance. From a decrease
of 8%, decentralization becomes the optimal configuration. After
multiplying the in-house sterilization fixed cost by a factor of 2.6,
the centralization at hospital H1 from period 1 becomes the optimal
configuration. We can state that network configuration is sensitive
to a decrease in in-house sterilization fixed cost. However, if the
configuration decision involves hospitals which have operated the
sterilization activity for some time, then the incurred in-house
sterilization fixed cost should be known with some accuracy.
Emphasis should be rather placed in CSS fixed cost estimation by
referring to experts in the field.
The number of vehicles requested to ensure transportation
between hospitals and the CSS is based on the annual produced
quantities and the capacity of one vehicle. The latter was
determined under the assumption that a vehicle ensures 3 trips a
day. Obviously, vehicle dimensioning, at this level, does not take
into account short-term variation of the demand. The question
here is what if the number of vehicles acquired is not enough
to cover the demand on a daily basis? To answer this question,
we propose to assess the impact of vehicle capacity decrease
on network configuration. A decrease in one vehicle capacity
could be seen as lesser trips per day but more hospitals inserted
in the route. With a decrease of 18% in vehicle capacity the
decentralization becomes the proposed solution for scenario 22.
For a decrease ranging from 2% to 17%, centralization in hospital H1
from period 2 remains the proposed configuration but 6 vehicles
are required instead of 5. It means that the need for one more
vehicle will not affect the quality of the decision at this level. It
is clear, however, that operating and managing the CSS will bring
additional difficulties and challenges to handle the demand of
the different hospitals of the network on a daily basis. Integrated
production and vehicle routing scheduling approach should be
developed and adequately implemented to enable conducting
operating theatre activities safely and smoothly. This supposes
appropriate use of Information Technology (such as RFID, [3])
to ensure timely information about operating theatre schedules,
hospital demand and inventory levels.
The proposed location–allocation model serves as a decision
making tool for the configuration of hospital sterilization service
within a hospital network. Basically, it is exploited while consid-
ering one CSS and two alternatives, centralization vs. decentral-
ization. However, it can be used more widely (while designing a
proper experimentation) in the perspective to design the network
configuration while considering, for example, several CSSs and
several options of centralization vs. decentralization. Besides, the
proposed model can be used as a what-if analysis tool to identify
under which conditions the centralization vs. decentralization is
the best configuration. For example, if hospitals H7 , H8 and H9 hire
the human resources indicated above and the demand has a con-
stant pattern, centralization starting at period 2 becomes the pro-
posed configuration by the model.
6. Conclusion
In this paper, we proposed an optimization model for the
configuration of hospital sterilization service within a hospital
network. The model examines two alternatives: the centralization
of the service in a common CSS or the decentralization, meaning
that each hospital keeps in-house sterilization service. The
problem is formulated as a location–allocation model and permits
us to determine the location and size of the CSS.
The proposed model is solved by commercial solver IBM
ILOG CPLEX 12.2. Three solution methods are investigated: (1) a
resolution based on default parameters of CPLEX; (2) a resolution
based on default parameters of CPLEX while enabling aggressive
settings for cut generation; (3) a resolution using aggressive
settings for cut generation and customized cuts. In order to
evaluate the proposed mathematical model, 21 scenarios, for a case
based on real life situations within a hospital network environment
are tested. The experimentation of the proposed model highlights
the interest of the centralization of the sterilization service within
hospital network through resource sharing and optimization.
Moreover, the obtained results show that the proposed MILP
can be solved to optimality for moderate size scenarios (like those
used in our study) with the use of commercial MILP solvers and the
addition of appropriate customized cuts to the original model.
Further analysis was conducted and pointed out how network
configuration is sensitive to the number of human and material
resources available in each hospital of the network as well as to
sterilization fixed costs.
The proposed model can also be used in the perspective to
design the network while considering the case of a mixed configu-
ration where some of the network hospitals move to the centraliza-
tion and the others keep their own sterilization services. For that,
an appropriate experimentation scheme must be designed.
In further work, the case of a partial centralization where some
products are performed in the hospital and the others are sent to
the centralized sterilization service looks to be an interesting al-
ternative to study. In the former case, static vs. dynamic alloca-
tion resource strategies can be evaluated and compared. Another
prospect of this study is to generalize the obtained results and to
establish rules for the choice centralized vs. distributed steriliza-
tion service depending on other criteria like order-to-delivery time
and service quality level.
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