The document presents an overview of inventory management techniques. It discusses the objectives of inventory management such as maintaining adequate stock levels to avoid production delays and excess costs while also avoiding excess inventory. It describes several key inventory management techniques including ABC analysis which categorizes items based on their financial impact, VED analysis which categorizes based on criticality, EOQ which determines optimal order quantities, and FIFO and FEFO which specify which inventory items to use first based on date of receipt or expiration. The presentation provides background on important inventory management concepts.

1. Presentation
On
Inventory Management
Shree Medical and Technical college,
Bharatpur-12, Chitwan
Presented by:
Sanjay kumar yadav
B. Pharm., 8th sem.1/18/2020 1

2. Table of content
1. Introduction
2. Objectives
3. Advantages of inventory management
4. Techniques of inventory management
- ABC method
- VED method
- EOQ method
- FIFO analysis
- FEFO analysis
5. References

3. Introduction
 Inventory management is the “Operation of
contineously arranging receipt and issues in such a
way to ensure that stock balance in quantity and
value are adequate to support the current rate of
consumption at all times, with due regard to
economy.”
 It defines as a proper control over maintenance of
stock in store department.

4. Objectives
• Maintaining adequate stock so as to avoid production held
up, loss of revenue and increase in cost at emergency.
• To avoid excess investment in stock.
• To operate hospital pharmacy at low cost.
• To provide better service to patients by maintaining
contineous supply of medicine.
• To prevent shortage in supply and over-stocking of items.
• Find the bulk discount while purchasing.

5. Advantages of inventory management
Ensures an adequate supply of materials
Minimizes inventory costs
Facilitates purchasing economies
Eliminates duplication in ordering
Provides a check against the loss of materials
Facilitates cost accounting activities
Enables management in cost comparison

6. Techniques of inventory management
1. ABC method
2. VED method
3. EOQ method
4. FIFO analysis
5. FEFO analysis

7. 1. ABC (always better control) method
It is based on the criteria “a small number of
items consume large or thick price of resource
and vive-versa”
Group of
drug
Percentage of
total inventory
Percentage
of total
fund
examples
A 10-20% 75-80% Human albumin, anti anginal
drugs, immunosuppressant drugs
B 20-25% 15-20% IV fluids, hematinic, vitamins
preparation
C 60-70% 5-15% Anti pyretics, antacids

8. 2. VED (Vital, Essential and Desirable)
method
 It is based on the critical value and shortage cost of an
items.
Vital items:
 These are life saving in nature and for which there are
no other suitable substances.
 In this shortage cannot be tolerated.
 Eg. Adrenaline, tetanus toxoid, insuline injection etc.

9. Cont…
Essential items:
There are unavoidabel for the normal function of
store or its service.
These are effective against less sever but are not
absolutely vital in providing basic health care.
Shortage can be tolerated for a short period.

10. Cont…
Desirable items:
These are required by pharmacy but they do
not affect the quality of service to patients.
They are used for minor or self limiting illness.
Shortage will not adversely affect but may be
using more resources.

11. 3. EOQ (Economic Order Quantity)
Method
• It is the number of units per order to be
purchased which will minimize both carrying
cost and ordering cost.
• EOQ is the amount of inventory to be ordered
at one time for purposed of minimizing annual
inventory cost.

12. 4. FIFO analysis
First-In, First-Out, is important for companies
that distribute products with expiration dates.
 It is a safe practice that ensures your products
will not expire or go bad.
 With FIFO, the oldest products are used or
picked first, ensuring product quality and
safety.

13. 5. FEFO analysis
First Expired, First-Out, is similar to FIFO in
that items closest to the expiration will be
shipped first.
The “E” refers to the expiration date of the
product.
In order for the FEFO methodology to be used,
items must have serial or lot numbers on
them and the item has to be posted to
inventory with an expiration date.

14. References
1. https://www.slideshare.net/EdwardHilton2/a
n-introduction-to-fifo-lifo
2. https://www.slideshare.net/DivyaeSherry/ab
c-analysis-and-fifo-and-lifo-of-stanley-
furniture-hypothetical
3. https://www.unex.com/fifo-vs-fefo-whats-
the-difference/

15. 1/18/2020 15