1. SELECTIVE INVENTORY CONTROL
AND ITS APPLICATION IN APOLLO
HOSPITAL

2. OPERATIONS
Himani Chowhan 13031
Hetanshi Desai13030
Palak Aggrawal-13047
Isha aggawal-13033
Anubhav Lal 130007
Sayalee Deore 13061

3. WHAT IS INVENTORY?
 Inventoryreferstostockofrawmaterials,workinprogress
andfinishedgoods
Canbestoredforfutureuse.
Inventorypossessvalue.
Objectiveofinventoryistoensurecontinuoussupplyof
goodsatreasonablecost.

4. NEEDS OF INVENTORY
 To make bulk purchase and get advantage of
discount
 To maintain customer service level
 To maintain continuous flow of supply through
supply chain
 To achieve economy of scale in transportation

5. WHAT IS INVENTORY CONTROL
 Its planning, ordering and scheduling of raw
materials
 Right quality of raw materials available at right
time
 Systematic control over purchasing, storing and
using of material.

6. FUNCTIONS OF INVENTORY CONTROL
 Effective use of financial resources
 Protection against all material losses
 Proper calculation of cost of production
 Keep the ball of production bouncing
 Economies in purchasing
 Eliminates redundant inventory
 Keeping prompt delivery to the customers

7. SCOPE OF INVENTORY CONTROL
 Formulation of relevant policies
 Determining economic order quantity
 Determining lead time
 Minimization of material-handling and
storage cost
 Ascertaining Safety Stock

8. MAIN TECHNIQUES IN SELECTIVE INVENTORY
CONTROL
 ABC Analysis
 GOLF Analysis
 SOS Analysis
 HML Analysis
 SDE Analysis
 FSND Analysis

9. CLASSIFICATION OF INVENTORY
Classification Full form Criterion employed
ABC Analysis Always Better Control Usage Value (i.e.
Consumption per period x
price per unit)
GOLF Analysis Govt, ordinary, local, foreign Source procurement
SOS Analysis Seasonal off seasonal Seasonality
HML Analysis High Medium Low Unit Price i.e. does not take
consumption into account
FSND Analysis Fast, slow, non-monetary,
material demands
Issues from store
SDE Analysis Scarce, difficult, easy Procurement difficulties

10. HML ANALYSIS
The cost per item (per piece) is considered for this analysis. High cost items (H),
Medium Cost items (M) and Low Cost item (L) help in bringing controls over
consumption at the departmental level.
Uses and application
•To assess storage & Security
Requirements
•High priced items in cupboards e.g.
bearings, worm wheels
•To keep control over consumption at the
departmental head level
•Authority to indents of High & Medium
priced items to departmental head after
careful scrutiny
•To determine the frequency of stock
verification
•checking frequency: more for high priced
items and less for L category
•To evolve buying policies to control
purchases
•Excess supply: Not accepted in case of H
& M category, Acceptable in case of L
category
•To delegate authorities to different
buyers to make petty cash purchase
•H & M by senior & L by junior buyers

11. FSN ANALYSIS :
 This analysis is to help control obsolescence and is based on the
consumption pattern of the items.
 The items are analyzed to be classified as Fast-moving (F), Slow-
moving (s)and Non-moving (N) items. The Non-moving items
(usually not consumed over a period of two years) are of great
importance. Scrutiny of non-moving items is to be made to
determine whether they could be used or be disposed off.
 The fast and slow-moving classifications help in arrangement of
stock in stores and their distribution and handling methods.

12.  SDE ANALYSIS :
 This analysis is based on spares availability of an item –
 S - refers to Scarce Items, especially imported and those which are very
much in short supply.
 D - are Difficult items which are procurable in market but not easily
available. For example, items which have to come from far off cities or
where there is not much competition in market or where good quality
supplies are difficult to get or to be procured.
 E - refers to Easy items – Items are those which are easily available; mostly
local items.
 It is normally advantageous to consider A, V & S items for selective control

13.  SOS ANALYSIS
 SOS analysis is based on seasonality of items and it classifies all the items
into two categories ‘Seasonal ‘And ‘Off seasonal ‘
The analysis helps in:
 Identifying items that are available only during a limited period of the
year .For e.g. Raw mangoes are only available only during a summers
 Identifying items that are seasonal but available throughout the year
however their costs in offseason are relatively high.
 SOS analysis can be selected when we want to determine the seasonality
of items and the right season for procuring them.

14. ABC ANALYSIS
 Classifying inventory according to annual value
of consumption of the items
A - very important
 B - mod. important
 C - least important
Annual
$ value
of items
A
B
C
High
Low
Few Many
Number of Items

15. CONT..
 When a large number of items are involved,
relatively few items account for a major part of
activity, based on annual value of consumption of
items.
 It is based on the principles of ‘vital few and trivial
many’.

16.  A-items : 15% of the items are of the highest value
and their inventory accounts for 70% of the total.
 B-items : 20% of the items are of the intermediate
value and their inventory accounts for 20% of the
total.
 C-items : 65%(remaining) of the items are lowest
value and their inventory accounts for the relatively
small balance, i.e.10%.

17.  POLICIES FOR A
 Develop class “A” suppliers more
 Purchasing dpt makes maximum efforts to
expeditade and delivery of these items
 The stock is maintained say in at least once in 15
days

18.  Policies for B
 Order quantities, re-order stocks and safety
stocks should be fixed and revised for B items say
once in 4-6 months
 Should be ordered less frequently in comparison
to A items

19.  Policies For C
 Large quantities can be bought as the cost involved will
be least
 Paper work is reduced if the stock is maintained and
ordered once or twice in a year
 The source of their supply can be based on their
reliability

21. ADVANTAGES
 Control
 Cost
 Improved service
 warehousing
Allows a company to control over- supply and under-
supply of important SKUs
Once the company has decided which items fall into
ABC category it can establish cost reduction
initiatives at SKUs level.
•Improvement in customer service level and order
fulfilment.
•provides a company information to stock the right
mix of inventory.
•extends to warehouse management as well
•Companies utilizing ABC analysis in the warehouse
give priority space to faster moving SKUs

22. OR

23. ADVANTAGES
 Control
 Cost
 Improved service
 warehousing

24.  Control: Stocking a better mix of right inventory
allows a company to control over- supply and
under- supply of important SKUs
 Cost: Once the company has decided which
items fall into ABC category it can establish
cost reduction initiatives at SKUs level.

25. CONT ...
 Improved Service: Improvement in customer
service level and order fulfilment.
 ABC analysis provides a company information to
stock the right mix of inventory.
 Warehousing: ABC inventory extends to
warehouse management as well
 Companies utilizing ABC analysis in the
warehouse give priority space to faster moving
SKUs

26. APOLLO HOSPITALS
 The basic principle of inventory control used by
Apollo hospitals is ABC based on cost criteria
 Based on ABC matrix, the method that they use
is economic analysis of drug expenditure of
prised vocabulary of medical stores (PVMS)

27.  Out of 493 drugs in PVMS section 1, only 325
were being used in reference hospital. The total
cost of drugs used was rupees 55,23,503
 Out of these 325 drugs 47 (14.4%) drugs were
category A consuming 70% of total expenditure
 73 (22.46%) drugs were category B consuming
20% of the expenditure
 Rest 205 drugs (63.7) were category C drugs
consuming only 10% of the expenditure

28. IMPLEMENTED
 Midland Bank Group
 British Aerospace
 Swiss Automobile Association
 London Underground
 Gardner Merchant Vending Services
 Dervo Inc- Division of Johnson and Johnson