Presentation on inventory control management tools essentially used in Pharmaceutical field.

1. WELCOME YOU ALL ON THE SEMINAR OF
INVENTORY CONTROL AND MANAGEMENT
PRESENTED BY GUIDED BY
PRIYANKA GOSWAMI ANANTA CHOUDHURY
M.PHARM ASSOCIATE PROFESSOR
DEPARTMENT OF PHARMACY DEPARTMENT OF PHARMACY
ASSAM DOWN TOWN UNIVERSITY ASSAM DOWN TOWN UNIVERSITY

2. INVENTORY
Inventory is actually money, which is
available in the shape of materials,
equipment, storage space, work time etc.
Department of pharmacy, ADTU 2

3. TYPES OF INVENTORY
 Production inventories: These are the raw material used in
manufacturing process & are converted by a manufacturer
into finished products e.g.: active ingredient and excipients.
 Work-in-process inventories: It is also known as stock in
progress. Which refers to the goods in the intermediate
stages of production. These includes those materials which
have not yet been completed.
 Finished good inventories: this are final output of the
production process in the manufacturing such as saleable
items.
Department of pharmacy, ADTU 3

4. INVENTORY CONTROL
AND MANAGEMENT
 Inventory management refers to the activity of forecasting
and replenishing inventory which is focused on when to
order the inventory, how much to order and from whom to
order.
Department of pharmacy, ADTU 4

5. FUNCTION OF
INVENTORY CONTROL
 Smoothing out irregularities in supply
 Minimizing the production cost
 Allowing organization to cope with perishable materials.
Department of pharmacy, ADTU 5

6. CLASSIFICATION OF
INVENTORY CONTROL
 ABC classification
 VED classification
 HML classification
 FSN classification
 SDE classification
 SOS classification
Department of pharmacy, ADTU 6

7. CLASSIFICATION OF
INVENTORY CONTROL
 ABC Analysis: ABC analysis refers to the always, batter
and control. A-class of item are those whose consumption is
around 70% but the total inventories account for about 10%.
B-class are the intermediate whose consumption is less when
compared to A-class. The total consumption is 20% and the
inventory item is about 20%. C-class of item are lowest
consumed and the total inventory account for 70%. For A-
class there should be constant control & stock level should be
checked periodically as it account for only 10% whereas B-
item are need based & for c- item little control is needed.
Department of pharmacy, ADTU 7

8. CLASSIFICATION OF
INVENTORY CONTROL
 VED Analysis: It is important for hospital pharmacy & it
stand for vital, essential and desired. For v-item reasonably
large stock is necessary. These are the items without which
the hospital may face the problem for e.g. steroid preparation.
For E-class moderate stock level is maintained e.g.
transfusion fluids. For D-item minimum stock level is
maintained & the absence of these items does not hampered
the hospital.
Department of pharmacy, ADTU 8

9. CLASSIFICATION OF
INVENTORY CONTROL
 HML Analysis: These class analysis the material according
to their price & then classify them as H-item, M-item and L-
item. H stands for high price, M stands for medium price
and L stand for low price. When it is desired to security
arrangements H-items are kept under lock and key, M-item
are kept under the supervision and L-item are kept open in
the shop.
Department of pharmacy, ADTU 9

10. CLASSIFICATION OF
INVENTORY CONTROL
 FSN Analysis: These items takes account the distribution
and handling pattern of items from stores. F stands for fast
moving, S stand for slow moving and N stand for non-
moving. Items classified under S and N requires more
attention. There may be several reasons why an item has got
into ‘N’ category. There may have been change in
technology or change in the specification or a particular
spare part.
Department of pharmacy, ADTU 10

11. CLASSIFICATION OF
INVENTORY CONTROL
FSN analysis ensures the following:
 Periodic review of categorization under F.S.N.
 Take appropriate action to increase number of orders or
quantity per order against fast moving items.
 Close watch of slow moving items.
 Find alternate use (substation) of slow moving items so that
their usage rate can be increased.
Department of pharmacy, ADTU 11

12. CLASSIFICATION OF
INVENTORY CONTROL
 SDE Analysis: S-Scare materials are those materials, which are
hardly available. D-Difficult materials are those materials, which
are available with difficulty. E-Easy materials are those materials,
which are available easily.
 Scarce materials: Are normally in short in supply. They can be
imported material or have to be procuring through government
agencies or authorities. Therefore such materials have to be
procuring in less number of purchases say once in a year because it
involves lots of efforts and expenditure every time when they are
tried to be procured.
Department of pharmacy, ADTU 12

13. CLASSIFICATION OF
INVENTORY CONTROL
 Difficult Materials -Are those materials which are not easy
to procure but are available indigenously. These are those
materials, which have to come from far off distances. These
items require sufficient notice in advance for their
procurement.
 Easy Materials-Are those materials, which are readily
available and are also standard materials and in their case
there supply or availability is much more then their demand
in market. These are also available in local market.
Department of pharmacy, ADTU 13

14. CLASSIFICATION OF
INVENTORY CONTROL
Once S.D.E. analysis are carried out and items are identified
then decisions can be made or which subordinate should
purchase which materials on regular analysis. S.D.E. analysis
also helps to decide purchasing policies. For e.g.: - For Scarce
materials forward purchasing policies can be adopted. For
Difficult materials, schedule-purchasing policies can be
adopted and for Easy group of items, contract-purchasing
policies can be adopted.
Department of pharmacy, ADTU 14

15.  SDE analysis is carried out so as to take care of various
purchasing problem that normally come on day-today basis.
Various purchasing problems that come on day- to- day
basis are as follows: -
• Non- availability.
• Scarcity.
• Longer lead-time.
• Geographically scattered.
• Unreliable sources or supply
Department of pharmacy, ADTU 15
CLASSIFICATION OF
INVENTORY CONTROL

16. CLASSIFICATION OF
INVENTORY CONTROL
 SOS Analysis: S stands for seasonal item and OS stand for non-
seasonal item. Again seasonal items can be classified into two
groups.
 Those seasonal items which are available only for a limited period.
For example, agricultural products such as mangoes or raw
material for cigarette factory or raw material for paper industries
are available for a limited time during this season. Therefore the
job of the purchasing department becomes concentrated during
this season and they are expected to procure full years quota
consumption during this periods.
Department of pharmacy, ADTU 16

17. CLASSIFICATION OF INVENTORY
CONTROL
 These are seasonal items but they are available throughout the year.
For example apples and all other food grains these items are cheaply
available during season at the lowest price but they are made
available to the customer through out the year such items are required
to be purchased in bulk quantities taking advantages of discount
but at the same time one must take care to see and whether savings
due to price discounts are not offset by holding or carrying cost of
inventory.
 Non-seasonal items are those, which are available through out the year
without any appreciable price variation. For example stable items like
salt come to this category. These items are purchased taking into
consideration normal purchasing problems and involve normal
purchasing procedures.
Department of pharmacy, ADTU 17

18. EOQ
 Economic order quantity (EOQ) is the order quantity that
minimizes total inventory holding cost and ordering cost.
EOQ typically applies only when demand for a product is
constant over a given period of time and each new order is
delivered in full when inventory reaches zero.
 The primary goal of economic order quantity is to determine
the optimal number of units to reorder so that the total cost
associated with the purchase, delivery and storage of the
product are minimized.
Department of pharmacy, ADTU 18

19. EOQ
EOQ= √2AS/IU
S= ordering cost
A= annual usage unit
I= annual inventory carrying cost
u= cost of one unit
Department of pharmacy, ADTU 19

20. REFFERENCE
 International Journal of Innovative Research in Science,
Engineering and Technology, 3 (1), 2014.
 C.V.S subrahmanyam, pharmaceutical production and
management, 1st edition, Vallabh Prakashan, New Delhi,
2011, page no. 292-300.
 L Lachman, H.A Lieberman, the theory and practice of
industrial pharmacy CBS Publishers & Distributors
PVT.LTD. New Delhi, 2012, page no. 747-753.
Department of pharmacy, ADTU 20

21. THANK YOU