Pricing policy should be an appropriate mechanism to control inventory levels in the blood bank. American Red Cross (ARC) is a non-profit organization. Even though procuring, processing and scientific storage of blood involves high cost. Then it must be covered by the adoption of an adequate pricing policy for the blood material. ARC has to compete with the local blood banks with their low-cost blood materials and it also necessitates the implementation of a proper pricing policy. The inventory level of blood group material can be maintained by the adoption of a proper pricing policy.
The demand for blood from the hospitals for their own blood inventory can be reduced by the application of high prices to the blood materials. It may compel the hospitals to reduce the excess inventory of blood and thus the rate of over-dating of blood can be minimized. The availability of rare blood materials can be ensured to all hospitals by the adoption of a high price to those materials. Because high-priced materials are collected by them only when the demand for them arises.
Pricing may be based on the quality of the blood; i.e., blood that is collected within a lower time period may be priced higher than that of the earlier bloodstock. In some medical situations, the currently procured blood is necessary. So, this pricing policy is adaptable. ARC can fix the price of those blood materials in which they are the monopoly supplier, at a higher level. Then the loss in supply of other competing materials can be made up. Modern management techniques like VED analysis (vulnerable, essential, desirable) can be adopted to classify the blood groups to store the optimum level of inventory for each group.