Currently, the SNS policy allows manufacturers to sell the pills at a predefined date prior
to expiration rather than let the drugs spoil; however, considering the fact that the size
of the stockpile is huge compared with the regular market demand while the drugs are so
close to their expiration date, the potential salvage value is low. From the manufacturer’s
perspective, if it can apply a more sophisticated inventory holding policy, which allows the
constant usage of the stockpile to meet the regular market demand, and at the same time
refill with new production to maintain the minimum stockpile requirement; then, the firm
can save on the total cost in maintaining the stockpile inventory, hence making it possible to
further reduce the price charged to the government.