This document discusses inventory control and ABC analysis. It defines inventory as materials, parts, supplies, tools, and products kept in stock. Inventory control aims to ensure adequate supply of medicines. ABC analysis classifies inventory into A, B, and C categories based on annual usage value. High value A items that constitute 10% of inventory account for 75% of total value and require close control. B items account for 15% of value and C items account for 10% of value with loose control. ABC analysis can be used to prioritize inventory management and determine reordering strategies.

1. Vignan Pharmacy College, Vadlamudi
PRESENTED BY UNDER THE GUIDANCE OF
CHINNE KRANTHI Dr.G.RAMESH,
14AB1T0005 DEPARTMENT OF PHARMACY PRACTICE
PHARM D, 4th YEAR

2. CONTENTS
• INVENTORY AND INVENTORY CONTROL
• OBJECTIVES AND CHARACTERISTICS OF INVENTORY
CONTROL
• IMPORTANCE OF INVENTORY CONTROL
• STEPS FOR INVENTORY CONTROL METHODS
• ABC ANALYSIS
• APPLICATIONS OF ABC ANALYSIS
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3. INTRODUCTION
• INVENTORY:
Inventory means all the materials,parts,supplies,expense tools and
inprocess or finished products recorded on the books by an
organisatiion and kept in its stocks,warehouses or plant for some
period of time.
• INVENTORY CONTROL:
Inventory control is defined as “the supervision of procurement,
storage and accessibility of items in order to ensure an adequate
supply of medicines in right time.”
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OBJECTIVES OF INVENTORY CONTROL:
•Protection aganist fluctuations in demand.
•Better use of men, machines and material’
•Protection aganist fluctuation in output.
•For production economics.
•Control of stock volume.
•Control of stock distribution.
CHARACTERISTICS OF INVENTORY:
The concept of inventory and its relation with performance of any system
can be very well explained by the following statement.
•Inventories serves as cushions to absorb shocks.
•Inventory for any organisation is a necessary evil.
•Inventory provides production economies.
•Marketing, production, finance and purchasing decisions directly
influence the level of inventory.

5. IMPORTANCE OF INVENTORY CONTROL
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Importance of inventory to an organisation can be listed as
•Provides and maintains good customer service.
•Enables smooth flow of goods through the production process.
•Provides protection aganist the uncertainities of demand and supply.
•Various production can be performed economically and independently.
•It can allow temporary variations in operating rates.
•Ensures a reasonable utilisation of equipment and labour.
•With purchases in bulk discount can be availed.

6. STEPS FOR INVENTORY CONTROL
Selection of the medicines
Determining the quantity required(cycle stock ,buffer or saftey stock)
Procurement of the medicines
Selection of the supplies
Contract terms
Monitoring the order status
Check the received medicines
Payments to the vendors
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Storage of medicines
Product list
Order list
A.B.C ANALYSIS:
ABC method of inventory control is also called as “Always Better
Control” method.
PRINCIPLE:
•It is based on the concept “Thick on the best and thin on the rest”.
•It is observed that any organisation have to stock and keep track of large
nmber of items of different kind.
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.

8. 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.
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9. 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
• To evolve useful reordering strategy
• Stock records Priority treatment to different items
• Determination of saftey stock limits
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11. % of A items = 2/30 × 100 = 6.66%
% of B items = 8/30 × 100 = 26.6%
% of C items = 20/30 ×100 = 66.6%
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12. REFERENCES
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•Kamal Dua, Kavita Pabreja, Vijay Kumar Sharma, Community
Pharmacy Basic Principles & Concepts, Pg.no: 40-41.
•H.P. Tipnis, Amrita Bajaj, Hospital Pharmacy, page no: 121-122
•https://www.slideshare.net/akshay_005/abc-analysis
•en.m.wikipedia.org.

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