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SUBMITTED BY UNDER THE GUIDANCE OF
RAGINI.VEMPARALA DR. G.RAMESH PHARM.D
15AB1T0030 DEPARTMENT OF
IV PHARM. D PHARMACY PRACTICE
VIGNAN PHARMACY COLLEGE
(Approved by AICTE & PCI Affiliated to JNTU KAKINADA)
VADLAMUDI, GUNTUR DIST, ANDHRA PRADESH, INDIA, PIN: 522 213
ABC ANALYSIS
OF
DRUGS
 Inventory means all the materials, parts
supplies, expense tools and in process or
finished products recorded on the books by an
organisation and kept in its stocks,warehouses
or plant for some period of time.
 Inventory control is defined the supervision of
procurement, storage and accessibility of
items in order to ensure an adequate supply of
medicines in right time
ALWAYS BETTER CONTROL
 ABC method of inventory control is also
called as “Always Better Control” method
 The main use of ABC analysis is to improve
your ability to deal with large and complex
data sets by breaking them down into three
segments.
 These segments define the priority of the
data within whatever area you are using
them in.
PRINCIPLE:
It is based on the concept “Thick on the best
and thin on the rest”.
Annual usage value = (Annual Requirement)per unit cost
In ABC analysis the items are categorised in
three main categories on the basis of their
usage value.
More costly and valuable items are classified as A:
•These are large investment items but not much in number
that is vital few say 10% of the items account for 75% of
total capital invested in inventory.
• These items need more closer and careful control. These
items have high inventory cost and frequent order of small
size for these items can result in enormous savings.
Average usage value items are classified as B :
•About 15% of the items in an inventory account for 15% of
the total investment.
•Those items are less important than A class items bt have
costly enough to have more attention on their use
 These items cannot be overlooked but need
lesser degree of control than those in class A.
 Statistical sampling is generally applied to their
control.
Low usage vale items are kept in class c:
•About 75% of the inventory items account for
only 10% of the invested capital.
•These items can be stored at an operative place
where people can help themselves without any
requisition formality.
•Loose control of ‘C’ items will increase their
investment cost and expenditure on shelfwear,
obsolescence and wasteful use.
APPLICATIONS OFABC ANALYSIS:
 ABC analysis can be effectively used in material management .
 The various stages where it can be applied are
1.To evolve useful reordering strategy
2.Stock records
3.Priority treatment to different items
4.Determination of saftey stock limits
5.Store layout
6.Value analysis
 Item with % cummulative cost between > 70% categorised as ‘A’
items
 Item with % cummulative cost between 10-70% categorised as
‘B’ items
 Item with % cummulative cost < 10% categorised as ‘C’ items
How to Do an ABC Analysis?
There are six basic steps1.
1.Identify the objective for the analysis. Determine success criteria.
An ABC analysis can accomplish one of two primary goals: to
reduce procurement costs or to increase cash flow by having the
right items available for production or direct to customer sales.
2.Collect data on the inventory under analysis.The most common
data, generally available from standard accounting already in
place, is annual spend per item. This can be in terms of raw
purchase dollars, or weighted cost including all ordering costs and
carrying costs, if those can be readily calculated.
3.Sort inventory in decreasing order of impact.From most to least,
rank order each inventory item by cost.
4.Calculate accumulated impact.Using a spreadsheet tool,
calculate the cumulative impact of the list of inventory items
by dividing item annual cost by total inventory annual spend,
then adding that amount to the cumulative total of percentage
spent.
5.Divide inventory into buy classes.This may not be a precise
80/20 characterization. Take a holistic view and do not concern
yourself with an exact 80/20 rule. The goal is to find areas
where renegotiating contracts, consolidating vendors, changing
strategic sourcing methodology, or implementing e
procurement may deliver significant savings or ensure in-stock
availability of high-volume items.
6.Analyze classes and make appropriate decisions.The key to this
step is follow-up and tracking. Once strategic cost
management is in place based on categories, periodic review
is critical to monitoring the success or failure of the decisions.
S.no Name of drug Dosage
form
Unit cost
(Rs)
Total
units
Total
cost
1) Ciprofloxacin 500mg Tablet 3.1 5,000 15,500
2) Cloxacillin 500mg injection Vial 8.6 1,000 8,600
3) Co-trimoxazole 400mg/80mg Tablet 0.4 6,000 2,400
4) Diethyl Carbamazine Citrate 50mg Tablet 0.2 65,000 13,000
5) Diclofenac 50mg Tablet 0.5 50,000 25,000
6) Diphenhydramine 25mg Capsule 0.9 5,000 4,500
7) Erythromycin 250mg Tablet 2.1 2,000 4,200
8) Ferrous salt equivalent to 60mg Iron Tablet 0.1 3,20,000 32,000
9) Furosemide 40mg Tablet 0.4 1,00,000 40,000
10) Gentamycin sulphate 80mg, 2ml inj Ampoule 6.1 1,20,800 7,36,880
PERFORM ABC ANALYSIS FOR FOLLOWING DRUGS:
S.no Name of drug Ascending
Order
Cummu-
lative Cost
% Total
Cost
%
Cummu-
lative
Cost
1) Co-trimoxazole 400mg/80mg 2400 4420 0.052 0.096
2) Erythromycin 250mg 4200 11620 0.091 0.254
3) Diphenhydramine 25mg 4500 16120 0.098 0.352
4) Cloxacillin 500mg injection 8600 29720 0.188 0.650
5) Diethyl Carbamazine Citrate 50mg 15000 42720 0.328 0.935
6) Ciprofloxacin 500mg 15500 58220 0.339 1.274
7) Diclofenac 50mg 25000 129420 0.547 2.833
8) Ferrous salt equivalent to 60mg Iron 32000 244100 0.700 5.34
9) Furosemide 40mg 40000 316600 0.875 6.931
10) Gentamycin sulphate 80mg, 2ml inj 736880 1863880 16.12 40.80
ABC Analysis of drugs:
ABC ANALYSIS
A
B
C
CONCLUSION:
•Percentage of A- Category drugs 0 – 0%
•Percentage of B- Category drugs are 1 – 10%
•Percentage of C – Category drugs are 9 – 90%
V. RAGINI

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V. RAGINI

  • 1. SUBMITTED BY UNDER THE GUIDANCE OF RAGINI.VEMPARALA DR. G.RAMESH PHARM.D 15AB1T0030 DEPARTMENT OF IV PHARM. D PHARMACY PRACTICE VIGNAN PHARMACY COLLEGE (Approved by AICTE & PCI Affiliated to JNTU KAKINADA) VADLAMUDI, GUNTUR DIST, ANDHRA PRADESH, INDIA, PIN: 522 213 ABC ANALYSIS OF DRUGS
  • 2.  Inventory means all the materials, parts supplies, expense tools and in process or finished products recorded on the books by an organisation and kept in its stocks,warehouses or plant for some period of time.  Inventory control is defined the supervision of procurement, storage and accessibility of items in order to ensure an adequate supply of medicines in right time
  • 3. ALWAYS BETTER CONTROL  ABC method of inventory control is also called as “Always Better Control” method  The main use of ABC analysis is to improve your ability to deal with large and complex data sets by breaking them down into three segments.  These segments define the priority of the data within whatever area you are using them in.
  • 4. PRINCIPLE: It is based on the concept “Thick on the best and thin on the rest”. Annual usage value = (Annual Requirement)per unit cost In ABC analysis the items are categorised in three main categories on the basis of their usage value.
  • 5. More costly and valuable items are classified as A: •These are large investment items but not much in number that is vital few say 10% of the items account for 75% of total capital invested in inventory. • These items need more closer and careful control. These items have high inventory cost and frequent order of small size for these items can result in enormous savings. Average usage value items are classified as B : •About 15% of the items in an inventory account for 15% of the total investment. •Those items are less important than A class items bt have costly enough to have more attention on their use
  • 6.  These items cannot be overlooked but need lesser degree of control than those in class A.  Statistical sampling is generally applied to their control. Low usage vale items are kept in class c: •About 75% of the inventory items account for only 10% of the invested capital. •These items can be stored at an operative place where people can help themselves without any requisition formality. •Loose control of ‘C’ items will increase their investment cost and expenditure on shelfwear, obsolescence and wasteful use.
  • 7. APPLICATIONS OFABC ANALYSIS:  ABC analysis can be effectively used in material management .  The various stages where it can be applied are 1.To evolve useful reordering strategy 2.Stock records 3.Priority treatment to different items 4.Determination of saftey stock limits 5.Store layout 6.Value analysis  Item with % cummulative cost between > 70% categorised as ‘A’ items  Item with % cummulative cost between 10-70% categorised as ‘B’ items  Item with % cummulative cost < 10% categorised as ‘C’ items
  • 8. How to Do an ABC Analysis? There are six basic steps1. 1.Identify the objective for the analysis. Determine success criteria. An ABC analysis can accomplish one of two primary goals: to reduce procurement costs or to increase cash flow by having the right items available for production or direct to customer sales. 2.Collect data on the inventory under analysis.The most common data, generally available from standard accounting already in place, is annual spend per item. This can be in terms of raw purchase dollars, or weighted cost including all ordering costs and carrying costs, if those can be readily calculated. 3.Sort inventory in decreasing order of impact.From most to least, rank order each inventory item by cost.
  • 9. 4.Calculate accumulated impact.Using a spreadsheet tool, calculate the cumulative impact of the list of inventory items by dividing item annual cost by total inventory annual spend, then adding that amount to the cumulative total of percentage spent. 5.Divide inventory into buy classes.This may not be a precise 80/20 characterization. Take a holistic view and do not concern yourself with an exact 80/20 rule. The goal is to find areas where renegotiating contracts, consolidating vendors, changing strategic sourcing methodology, or implementing e procurement may deliver significant savings or ensure in-stock availability of high-volume items. 6.Analyze classes and make appropriate decisions.The key to this step is follow-up and tracking. Once strategic cost management is in place based on categories, periodic review is critical to monitoring the success or failure of the decisions.
  • 10. S.no Name of drug Dosage form Unit cost (Rs) Total units Total cost 1) Ciprofloxacin 500mg Tablet 3.1 5,000 15,500 2) Cloxacillin 500mg injection Vial 8.6 1,000 8,600 3) Co-trimoxazole 400mg/80mg Tablet 0.4 6,000 2,400 4) Diethyl Carbamazine Citrate 50mg Tablet 0.2 65,000 13,000 5) Diclofenac 50mg Tablet 0.5 50,000 25,000 6) Diphenhydramine 25mg Capsule 0.9 5,000 4,500 7) Erythromycin 250mg Tablet 2.1 2,000 4,200 8) Ferrous salt equivalent to 60mg Iron Tablet 0.1 3,20,000 32,000 9) Furosemide 40mg Tablet 0.4 1,00,000 40,000 10) Gentamycin sulphate 80mg, 2ml inj Ampoule 6.1 1,20,800 7,36,880 PERFORM ABC ANALYSIS FOR FOLLOWING DRUGS:
  • 11. S.no Name of drug Ascending Order Cummu- lative Cost % Total Cost % Cummu- lative Cost 1) Co-trimoxazole 400mg/80mg 2400 4420 0.052 0.096 2) Erythromycin 250mg 4200 11620 0.091 0.254 3) Diphenhydramine 25mg 4500 16120 0.098 0.352 4) Cloxacillin 500mg injection 8600 29720 0.188 0.650 5) Diethyl Carbamazine Citrate 50mg 15000 42720 0.328 0.935 6) Ciprofloxacin 500mg 15500 58220 0.339 1.274 7) Diclofenac 50mg 25000 129420 0.547 2.833 8) Ferrous salt equivalent to 60mg Iron 32000 244100 0.700 5.34 9) Furosemide 40mg 40000 316600 0.875 6.931 10) Gentamycin sulphate 80mg, 2ml inj 736880 1863880 16.12 40.80 ABC Analysis of drugs:
  • 12. ABC ANALYSIS A B C CONCLUSION: •Percentage of A- Category drugs 0 – 0% •Percentage of B- Category drugs are 1 – 10% •Percentage of C – Category drugs are 9 – 90%