This document discusses inventory management in a retail drug store. It defines inventory and inventory management, and explains their importance in a drug store. It outlines objectives of inventory management like maintaining lowest investment levels and avoiding stockouts. Techniques discussed include ABC, VED, HML, and SDE analysis to categorize inventory. Other topics covered are perpetual inventory system, economic order quantity analysis, and computerized inventory control systems. Modern pharmacy software solutions are also mentioned.

1. Inventory Management in a Retail
Drug Store
•Presented By :
Thakor Khushbu K
•Guided By:
Dr.Yamini D shah
Head,Department of
Pharmaceutics and
PharmTechnology

2. Contents

3. What is Inventory?
•Inventory is refers to all the items,goods and
Materials held by a business for selling in the Market
to earn a profit.
•Inventory is always Dynamic.
What is Inventory management?
•Inventory Management is systematic approach to
storing and selling inventory both raw materials and
finished goods.
•In business terms, Inventory Management means
the Right stock at Right levels in. Right place at Right
time and at the Right cost as well as price.

4. What is important of Inventory
management in Drug store?
•Drug store Management is base on the Inventory
Principles.
•Inventory Management is broadly defined as
"activity of checking a shop stock".
•Inventory Management is ensuring the appropriate
amount of stock are maintained by a business,So as
able to meet customer demand without delay while
keeping the costs associated with holding stock to a
minimum.

5. Objectives of Inventory Management
•To maintain the investment at lowest level.
•To supply the drug on time.
•To keep inactive,waste,Surplus,scrap and obsolete items at
the minimum level.
•To avoid stock out and shortage.
•Wastages are avoided.

6. Functions Of Inventory management
1.To keep the inventories as low as possible
consistent with the market conditions.
2.To minimise "out of stock" danger,which results
in crash purchase at uneconomical rates.
3.To maintain a sufficient stock of finished product
to meet the reasonable expectations of customer
for prompt delivery of goods.
4.To maintain proper records so as to supply
accurate and regular material reports to the
management.
5.To forecast market and economic conditions of
supply as regards availability of materials.

7. Techniques of Inventory Control
•ABC Analysis
•VED Analysis
•HML Analysis
•SDE Analysis
•Perpetual Inventory System
•EOQ Analysis
•Modern Computerization of Inventory Control

8. ABC Analysis
•In big drug store, large inventory items are
stocked.In order to maintain a proper control of
Inventories,the ABC(Always Better Control)
technique is used.
•In this technique,the materials are divided into
three groups A,B and according to the cost of the
materials and money value of consumption.
•A Items:
In the whole of the inventory,there are a few costly
items which come under this group.
These items may not be more than 10% of the total
items,but these consume about 70% of the total
budget of inventories.

9. •B Items:
The items coming under this group are neither costly
nor cheap.
These items constitute 20% of the total quantity of the
Inventories and 20% of total expenditure of inventories
is spent on these items.
• C Items:
These items are comparatively cheaper in cost and
represent 70% of the total quantity of the inventories
and expenditure of inventories is spent on these items.

11. Calculation:
•Calculate the total amount spending per year
Annual consumption value is calculated with the
formula:
(Annual Demand) × (Item Cost per Unit)

12. For Examples:

13. •Calculate the usage of items in Total Usage:
Usage as a % total usage:
Usage of items × 100 / Total usage

15. Result:

16. Advantages Of ABC Analysis
1.The investment in inventory can be regulated and funds
can be utilise in the best possible manner.
2.There is closer and strict control on those items which
represents a major portion of total stock value.
3.It helps in maintaining enough safety stock of C
categories of items.
4.The scientific and selective control helps in the
maintenance of high stock turnover rate.

17. Disadvantage of ABC Analysis

18. VED Analysis
•This system are base on the utility of the material.
•In drug store,VED Analysis is very useful in
controlling and maintaining the stock of various
types of formulations of a particular groups of
drugs.
•It Divided in 3 Categories:
1.V= Vital Drugs
2.E= Essential Drugs
3.D= Desirable Drugs

19. •V:Vital Drugs
Vital Drugs contain 10% of the total items.They are
contain vital life saving drugs and their absence cannot be
accepted.
It's safety standards should be high,should never be out
of stock.
Ex.Anti Snake Venom
•E:Essential Drugs
It's contain 40% of the total items and their absence can
be tolerated for short stractches of time.
It should have minimum possible stock.
Ex.Corticosteroids drugs

20. •D: Desirable Drugs(Non essential drugs)
It's contain 50% of the total and their non availability
can be tolerated for longer periods of time.
These types of drugs required for less serious patients.
Ex.Paracetamol

21. For Example:
Based on Brand Drugs uses
•Acetyl salicylic acid is available as Disprin Tablet,
Anacin Tablets, Micropyrin Tablets.
• There is a great demand of Disprin Tablets,so these
are classified as vital tablets,followed by Micropyrin
Tablets which are covered under essential drugs due to
its less demand than Disprin Tablets.
•Anacin tablets may be considered as Desirable drugs
because there are hardly a few prescription of it.
•In a drug store,there should be maximum stock of
Disprin Tablets, followed by Micropyrine Tablet and
then of Anacin tablets.

22. Other Example:
Antacid Drugs uses
•Pantoprazole, Omeprazole and Famotidine.
•These is great demand of Pantoprazole Tablets,so
there are classified as vital drugs and Omeprazole
Tablets which are covered under essential drugs due
to less demand than Pantoprazole Tablets.
•Famotidine Tablets may be considered as Desirable
drugs because there are few prescription of it.

23. HML Analysis
•HML Analysis classifies inventory based on how much a
product costs/its unit price.
•Its classified in :
1High Cost (H)
•Drugs with a high unit value.
Ex.Etoposide Injection, Paclitaxel other than, Nebulizer,
Surgical items, Glucometer , Oximeter.
2.Medium Cost (M)
•Drugs with a medium unit value.
Ex.Daunorubin Injection, Doxorubicin Injection,
Amphotericin B vaginal gel, Cotrimoxazole cream,
Ketostar Anti Dandruff Lotion.

24. 3.Low Cost (L):
•Drug with low unit value.
Ex. Calpol Tablet, Combiflam Tablet, Eye drops other
than vicks, Eno powder.

25. SDE Analysis
•This analysis classifies inventory based on how freely
available an items or the length of lead times.
•First know about meaning of lead time:
It is the time taken between the placing of order and
receipt of drugs to the department. The longer the lead
time, the larger is safety stock, resulting in excess of
investment in inventories. As far as possible efforts
should be made to decrease the lead time for effective
inventory control.
•Lead time delay increase due to:
1.Supply delay: That is, the time is takes a supplier to
deliver the goods once an order is placed.

26. 2.Reordering delay:That is,the time until an ordering
opportunity arises again.
• SDE divided in 3 Categories:
1.S(Scare): Those drugs which are important but
required longer lead times.
2.D(Difficult):Drugs which require more than a
fortnight to be available, but less than 6 months lead
time.
3.E(Easy available):Those Drugs which are available
easily

27. Perpetual Inventory System
•This is a method of recording the store balance
after every receipt and issue to facilitate regular
checking and to prevent closing down for stock
taking.After every receipt or issues,the entry is
made in the bin card and balance is adjusted.
• Thus,bin card becomes perpetual inventory record
and store balance is recorded continuously after
every receipt and issue. All errors detected are
adjusted both in bin card as well as in store ledger
under proper authority.

28. Bin Card:
•This is a document maintained by the store keeper
in his store to keep of all items of materials and
goods in his store.So Bin Card serves the purpose of
providing ready reference.
•It shows quantities of each material
received,issued and in stock.
•A bin card is used for each material.Each receipt,
issue or return is recorded on bin card in a
chronological order and the latest balance is shown
after each receipt and issue.
•The bin card format show in next slide.

30. Store ledger
•It is kept in the cost accounting department.The
stores ledger is generally maintained in the form of
losses leaf cards because they can be easily
removed and inserted.

32. Continuous stock taking
•Under this system only a limited number of items are
verified on a day.The selection of the items of materials
should be such that each item of material gets checked
up at least a certain number of items in a year and
checking of a particular items is evenly distributed
during the period.
•The selected number of items are counted daily or
frequent intervals and compared with the bin card and
store ledger by the store keeper.

33. Advantages of Perpetual Inventory System:
1.It help in detection and immediate rectification of
clerical error/discrepancies.
2.It ensure a reliable checking of the store items in a
methodical manner without disturbing the routine
work of the enterprise.
3.Timely action can be taken on serious shortages.
4.It serves as a moral check on the staff,thus serving as
a deterrent to dishonesty.
5.It helps in the compilation of profit and Loss Account
and Balance sheet on interim date if so required.

34. EOQ Analysis
•Economic Order Quantity is the order quantity that
minimize the total holding cost and ordering costs.
•The total cost generally include acquisition cost,
ordering cost and carrying cost.
1.Acquisition cost can be minimized by placing
quotations and inviting tenders.
2.Ordering cost is the cost of placing orders for the
purchase of materials including cost of postage,
telephone .
3.Carrying cost is the cost of holding the materials in
the stores including rent of storages,cost of bins and
racks .

35. •The size of an economic buying quantity or Purchase
lots depends on many factors such as:
1.Inventory carrying cost.
2.Cost of purchasing and receiving.
3.Average consumption.
4.Annual sales rate.
5.The unit cost and quantity discount.
6.Availability of storage accommodation.

36. Methods for Determination of Economic Order Quantity:
1.Tabular determination of EOQ:
•A tabular arrangement of data relating to items of
materials help in the determination of an approximate
EOQ.
•This arrangement may help the drug store to find out
the number of order that need to be placed weekly,
quarterly, monthly or year.
•Next slide show table to determine of EOQ.

38. For example,
•The order cost of septran Tablet is Rs.8 per
order.Inventory carrying cost is 10% of the rupee value of
annual usage.Rupee value of the annual usage is Rs.1000.
•Suppose the item was ordered once in every month,the
order cost per year would be Rs96.Similarly,if items were
purchased once every two months i.e.6 times in a
year.The cost of ordering for the year would be Rs.
48(8×6).In this manner the annual Ordering cost can be
calculated for frequencies.
•The annual inventories carrying cost is then calculated
by the following method:The items which were purchased
once every month,the annual inventory carrying cost will
be (10/100×1000/12=Rs.8.33)

39. •Similarly the inventory carrying cost for other
frequencies can be calculated.
•The total annual cost of purchasing the items at
different order frequencies per year can be calculated by
adding the ordering cost and inventory carrying cost.
2.Graphic presentation of EOQ:
•Economic order quantity can also be determined
graphically.If a graph is plotted between order quantity
and cost to order and carry,the ideal order size is the
point where the sum of both the costs is the
minimum.The point occurs at A,where line representing
annual carrying cost intersects the line representing the
ordering cost.

41. 3.Determination of EOQ by algebraic Formula:
•EOQ can also be computed by using the following
formula:
EOQ=√2ab/cs
Where,
a=Annual consumption
b= Buying cost per order
c=Cost per unit of material
s=Storage and other inventory carrying cost
•EOQ determination the optimum turnover rate.

42. Modern Computerization of Inventory
Control
•The benefits of a computerized inventory control
system can be derived,when the business integrates it's
inventory control systems with the other systems such
as accounting and sales,that helps in better control of
inventory levels.
•In practice,when the inventory level reaches to its
minimum point,the system automatically generates a
purchase order,which is send to the supplier
electronically.Also the order copy of the PO is send to
the accounting department.Once the material is
received from the supplier,an inventory gets updated
on the system and at the same time,the notification is
sent to accounting department ,which is used against
the suppliers invoice and PO copy.

43. Which Software is use for Inventory
management in Drug Store?

44. 1.Visual Software (Rx108)
Retail 108 for Pharmacy Chemist shop software is ready to
meet any specific requirements for any Pharmacy Chemist
shop.
•Key Features:
1.Primary Stock Entry:
Auto stock adjustment if required.
2.Order processing:
Easy order processing on previous day sales, minimum
stock limit or on requisition.
linked with supplier app to slow various offers by supplies
on products.
Directly sending of order to supplies.
Purchase order generation if required.

45. 3.Barcoding:
Item wise, Company wise ,Batch wise Barcoding.
4.GST Reports:
Easy and systematic tax structure to support GST.
Automatic GST report generation.
5.Expiry Management:
Easy generation of expiry report.
Converting expiry into purchase return.

46. 2.PrimeRx software
•PrimeRx is a pharmacy software solution from Micro
Merchant Systems. This system helps retail pharmacies
and outpatient hospital pharmacies manage workflow
and automate refill processes.

48. 4.VIP Pharmacy software
VIP Pharmacy helps small to large pharmacy businesses
fill scripts efficiently and manage daily operations. This
software offers Rx Image Scanning and an Intelligent
Perpetual Inventory option that allows you to have
control over your pharmacy operations.

49. 5.Rx 30 software
Rx30 is a pharmacy software solution. Additional mobile
apps are available for delivery management, prescription
refill requests, inventory control, patient notifications,
and electronic signature collection.