Inventory Management

1. Inventory Management
Prepared by : Sristi Adhikari

2. Inventory
 A physical resource that a firm holds to in a stock with the
intent of selling it or transforming it into a more valuable form

3. Inventory Management
 Inventory management refers to the process of ordering,
storing and using a company's inventory: raw materials,
components and finished products.
 Inventory Management is a business process which is
responsible for managing, storing, moving, sorting,
arranging, counting and maintaining the inventory i.e.
goods, components, parts etc. Inventory management
ensures that the right inventory is available as per the
demand at low costs.

4. Stock management involves:
 Ensuring that right types and qualities of items are
always available when required
 Ensuring that stock is issued in the correct sequence
(first in first out)
 Maintaining records showing the ‘movement’ of items
into and out of the store, controlling and monitoring
those movements and maintaining full records of the
items in the store.

5.  Ensuring that the correct “stock levels” of the
various items are set and maintained
 Checking, counting or otherwise measuring stock
to ensure that records are accurate.
 Pricing and valuing the items in store

6. Physical Inventory
 Physical inventory is a process where a business
physically counts its entire inventory.
 Physical inventory is an actual count of the goods in
stock. This can involve counting, weighing, and
otherwise measuring items, as well as asking third
parties for counts of inventory items that have been
consigned to them

7. Purposes of Inventory Management
 To ensure a dependable, regular supply of good quality
commodities at service delivery point.
 To help to know when to order
 To know how much to order or issue.
 Maintain appropriate stock levels of all products to
avoid stock outs and overstocking

8. Perpetual Inventory System
 Maintenance of regular stock records is known as
perpetual(continuous stock taking) inventory.
 It implies a complete and updated account of
each item of stores both on records and physical
goods.
 Perpetual inventory means maintenance of such
records( stock control cards, store ledger) as it
will reflect the receipts, issue and balance of all
items in stock all the times.

9. Forms used Inventory Book
S.
No.
Name of form AGF No.
1 Purchase requisition form
(Kharid Adesh)
45
2 Goods Entry Report(Dakhila
Report)
46
3 Non- consumable Goods ledger
(Kharcha Nahune Jinsi Khata)
47
4 Transfer form (Hastantaran
Faram)
48
5 Material Inspection Form (Jinsi
Nirikchhan Farum)
49

10. S. No. Name of forms AGF No
6 Deduction Report 50
7 Request Form 51
8 Consumable goods Ledger (Kharcha hune
Jinsi Khata)
52
9 Stock Annual Description (Jinsi Maujat Ko
Barsik Bibaran)
59

11. Government of Nepal
………Office/Dept/Ministry AGF #45
Purchase Requisition Form
…………….. Purchase Order #: …………………
…………….. Date: ……………………
Please submit Date for goods received: ………..
goods ad invoice Place for goods received………….
as mentioned
S. No. Particular Quantity Unit Rate Total
Amount
Remarks
Total

12. Government of Nepal
……Office/Dept/Ministry AGF # 57
Stock Annual Description
S.No Ledger
#
Particular Stock
Remaining
Goods in
working
condition
Not working Remarks
Not be
repaired
Be
repaired

13. Classification Of Materials
 Consumable materials (expendable)
 Non-consumable materials (non-expendable)

14. Consumable materials
 Those materials which are consumed in use are called
consumable or expendable materials.
 Medicines, gauze, bandage, disposable syringe and
needle, stationery, gloves and others which normally do
not need further accountings and cannot be used after
one year are its example.

15. Non consumable Materials
 Materials which are not consumed in use and which
retain their original identity during their period of used
such as furniture , equipment which normally require
further accountings and can be used after one year.

16. Essential Data Concepts
 Maximum /minimum stock levels
 Authorized Stock Level
 Emergency Order point
 Lend Time stocking
 Losses/adjustment

17. Authorized Stock Level
 It is the maximum level of inventory of the organization
that the organization can store.
 It is also called maximum stock level
 This level avoids the wastages and other means of losses
along with extra burden to store

18.  ASL varies for commodity to commodity and
from organization to organization
 District Cold Room can store 2.25 months of
vaccine and other immunological commodity.

19. Lead time stocking
Lead time: The time it takes after receiving an order to
deliver the goods and services to a customer.
 The time lags present in a supply chain from a supplier
to the user at every stage is known as lead time
 The larger the lead time, the more commodities are
stored in organization

20. Emergency Order Point (EOP)
 There is a level in any commodity in any organization in
which the organization must order or request for the
commodities. This is known as emergency order point
 It varies for commodities to commodities and from
organization to organization
 If lead time and the quantity of item during lag time is
known , then EOP can be determined.

21.  If the lead time is 2 weeks and average usage is 18 per
week, then E0P= 18×2=36 units
 The day level of stock falls to 36 units , an order will be
placed
 In LMIS Nepal EOP is generally considered as one
month expense for any commodity.

22. Minimum Stock level (Safety Stocking)
 It is a minimum level of inventory that the organization
must store.
 This ensures the activities of the organization will go on
and will not stop with interruption with commodities.
 It varies for commodities to commodities and from
organization to organization

23.  The minimum stock level of District Cold store is 1.25
months vaccines and other immunological relate
commodity.
Safety stocking

24. Losses/Adjustment
 Many times we calculate and demand which we exactly
need.
 There is no certainly that all items we are receiving are
alright and ready to use as some items might be
defective or damaged.
 There are certain inevitable condition where vaccine and
drugs will be lossed.

25. Causes of Vaccine loss
Sealed Vial Open Vial
• Expiry date • Remaining amount at end of session
• Excess deep freezing • Inability to use trace amount of
vaccine from every vial
• Crack, Leakage • If vial is merged in water
• Excess supply than demand • In suspected contamination
• Missing label • Missing label

26. Specialized store treatment for vaccines,
essential drugs and contraceptives
 Vaccines, Drugs and chemicals are very sensitive
product.
 Frequent exposure to environmental factors like light,
heat, moisture and heat particles can deteriorate their
quality.
 Deterioration in quality and alternation in physical and
chemical property change in dosage and decrease
efficacy.

27. Cold Chain Maintenance
 An uninterrupted system of transporting and storing
vaccines with temperature range 2° to 8°C from the
point of manufacture to point of administration is Cold
chain.
 Cold chain maintenance is a term defined as the
materials, equipment and procedures used to maintain
all temperature between + 2° to +8°C from the point of
manufacture to point of administration throughout the
distribution and storage process of vaccines.

28.  In case of Nepal, Cold chain Maintenance includes the
delivery from the manufacturer to central cold store,
Teku; to regional cold stores; to district cold room; to
PHCC/HP; to vaccination centres.
 A breech in the cold chain could decrease vaccine
efficacy.

29.  Vaccine that have been rendered ineffective from cold
chain breach could cause substantial financial losses,
and result in inability to supply the immunization
program with the necessary inventory.
 Vaccines are temperature sensitive.

30. Temperature range for Vaccine storage
Vaccine Central Cold
store
Regional cold
store
District
Cold room
Health
Institution
like
PHCC/HP
Immunization
Centres
Polio -15° to -25°C +2° to 8° C
Measles -15° to -25°C OR +2° to +8° C +2° to 8° C
+2 to 8 CBCG
DPT
Hep B
Hib
+2° to 8° C +2° to 8° C
TT +2° to 8° C +2° to 8° C
JE +2° to 8° C +2° to 8° C

31. The vital elements in cold chain are:
 Cold Chain equipment
 Transportation
 Trained Human resource for maintaining the linl

32.  The cold chain equipments are:
 Walk in cold room
 Refrigerator
 Deep freeze
 Cold box
 Vaccine carrier
 Ice packs

33. Walk in cold room:
 They are in regional level meant to store vaccines upto 3 months and served
for different zonal and district of that regions.

34. Refrigerator

35.  DPT, DT, Typhoid vaccine and other diluents need to be stored in cold part
having temperature need to be stored in cold region and vaccines like OPV,
measles, MMR, Rabies vaccines shich are highly heat sensitive need to be
stored in freezer
Deep Freezer: It is to be used for storing polio vaccine and freezing of ice packs
Cold box:

36.  They are supplied to all peripheral system. They are used to transmit large
quantities of vaccine by vehicles to reach site.
 Before vaccines are placed in cold boxes, frozen icepacks are placed at the
bottom and sides
Vaccine carrier:

37.  Ice Packs

38. Inventory control
Control over inventory is :
 to minimize cost of service/production
 To prevent extra expenses on unnecessary purchase
 To prevent improper use of inventory

39. Materials Purchasing procedures
 Different organizations have their own purchase procedure.
 In government sector, when goods are needed for any staff or department,
they must fill up the request form. (AGF # 51)
 It should be approved by the head of organization or authorized person.
 During approval , the head of the organization will tick on “ issue from the
stock” if it is on the stock otherwise tick on the sentence ‘issued by
purchasing goods from market’.
 Then form is forwarded to storekeeper.

40.  The store keeper fills up the ‘purchase requisition form (AGF # 45)’ if there is
no goods in the stock and make it approved from organizational head or
authorized person.
 Only after approval of AGF # 45 , the storekeeper can purschase goods.
 Once the goods arrive to store , it is storekeeper’s duty to check whether the
goods are according to AGF # 45 .

41.  After inspection, he/she fills up the form AGF # 46 (Goods Entry Report) and
has to mention any deviation on the quantity, quantity or property of the
goods in remark column.
 It is mandatory to fill AGF # 46 regardless of the source of goods ( purchase,
donation, transfer or others)

42. Issuing of goods/materials
 Goods are issued after approval of the request form (AGF #51).
 To issue goods the storekeeper fills up the AGF 354 (Goods Sanction Memo).
 Physical inspection of the stock should be done.
 The goods which re damaged, spoiled, reduced due to leakage, evaporated
are mentioned in AGF #50 (Deduction Report).
 AGF #48, 55 and 56 are used to transfer goods from one office to another

43. Recording Procedure
 AGF #52 is used to record non consumable goods and AGF # 47 is used to
record consumable goods.

44. Procedure for annual inventory report
 Every year separate detail description should be prepared for consumable and
non-consumable goods.
 For description of consumable goods, AGF # 49 (Material inspection form) is
sufficient.
 For description of non-consumable goods, AGF # 57 is used.

45. Drug/Vaccine Store Keeping
Indicates the process of keeping drugs/vaccines in a favorable environment to:
 protect and preserve the drugs
 maintaining up-to-date recording of their imported and dispensed
 Maintaining feasibility of store room.

46. The drug/vaccine store keeping can be described into major 2 steps:
1. Management of ideal storeroom
2. Safe storage of drugs

47. 1. Management of ideal storeroom
It is essential to keep drugs/vaccines in the room, which is capable to protect
and preserve.
An ideal store room must meet the following characteristics:
 Should be cool
 Dark (no direct sunlight exposure)
 Dry (no moisture, floors and walls should be dry)
 Well ventilated
 clean

48.  Away from mouse, cat and insects
 Should be organized
 Devoid of unnecessary furniture, cloths and other things
 Sufficient furniture, stationary must be available and should be kept in
managed way.

49. How to manage ideal storeroom?
 Clean regularly
 Maintain ventilation
 Protection from rats, insects
 Maintain light system
 Maintain dryness
 Organize room
 Avoid keeping other things
 Maintain security system

50. 2. Safe storage of Drugs/ Vaccine
 Select ideal storeroom
 Manage sufficient furniture, refrigerator and other necessary materials.
 Manage sufficient furniture, refrigerator and other necessary materials.
 Keep furniture 1 foot away from wall
 Keep cartons over the wooden planks, not directly on the floor.
 Don’t keep cartons or boxes one above another more than that of 8 feet
height.

51.  Cool items like vaccines need cold store or cold roof or refrigerator maintaining
temperature.
 Narcotics and controlled drugs are kept in one sector and locked
 Keep other medicine in racks in alphabetical order
 Keeping in medicine should be in systematic way.
 Accept concept of FEFO (First expiry first out) or FIFO (First in first out)
 Frequently observe expiry date , characters of damaged drugs, physical conditions
of room, invention and expel expired and damaged drugs.
 Don’t use another box unless drugs of broken box are completely dispensed.
 Keep up-to-date recording