3. INTRODUCTION
Inventory means all the materials, parts,
suppliers, expenses, and in process or finished
products recorded on registers/ books by an
organization and kept in its stocks for some
period of time.
5. DEFINITION OF INVENTORY CONTROL
Inventory control is defined as a scientific
method of finding out how much stock should be
maintained in order to meet the production,
demands & be able to provide right type of
material at right time, in right quantities & at
competitive prices.
6. DEFINITION OF INVENTORY
MANAGEMENT SYSTEM
Inventory management system provides
information to efficiently manage the flow of
materials, effectively utilize people and equipment,
coordinate internal activities and communicate with
customers
7. IMPORTANCE OF MAINTAINING
INVENTORY
It provide and maintains good customers
service
Enables smooth flow of materials through
production process
Ensure a reasonable utilization of equipment
Possibility of discount, if purchased in bulk
11. FUNCTIONS OF INVENTORY CONTROL
Improve productivity and efficiency
Avoid over stock and under stock
Quality management
Accurate inventory reports
Balance supply and demand
Increased profit
12. TYPES OF INVENTORY
1. Official Inventory
✔ Materials lying in the main
stores and being accounted
for, but have not been
issued to the user units.
✔ E.g. medical and surgical
items, dressings, linens, X
ray supplies, laboratory
items etc
13. 2. Unofficial inventory
✔The materials have been
issued to the user units like the
dispensary, CSSD , Laundry ,
wards, OPD etc .
✔In case of forecasting or
demand estimation these items
are not taken into consideration,
so it is called as un official
inventory.
15. ABC ANALYSIS
ABC analysis is a basic chain technique in
inventory control.
It is very common tool in all the stores where
all large inventory items are stocked.
“Always Better Control”
• CLASS A: High value items
• CLASS B: Medium value items
• CLASS C: Low value items
These three having different management
control associate based on cost factor or
annual consumption.
17. CLASS A: HIGH VALUE ITEMS
✔ More costly & valuable items
✔ Large investment but not many
(vital few)
✔ Need more clear & careful control
✔ Top inventory staff should have
control on materials.
18. CLASS B: MEDIUM VALUE ITEMS
• Average usage
• Less important than A
• But costly enough to have attention
• Cannot be overlooked but lesser degree of
control
19. CLASS C: LOW VALUE ITEMS
• Stored at operative place where people can help
themselves without formality
• Loose control
20. PRINCIPLES OF ABC ANALYSIS
The analysis is depends on its annual
consumption values rather than unit cost.
It does not depend on the importance of the
item
ABC categorization are not uniform, it depend
upon the size of the organization
21. PROCEDURAL STEPS
• Make the list of all items of inventory
• Determine the annual volume of usage &
money value of each item.
• Arrange all item in a descending order
• Mention the item numbers against their annual
consumption
• Calculate cumulative annual consumption value
22. • Calculate cumulative annual consumption
percentage
• Categorize items as per the consumption value
(cost) percentage.
25. ADVANTAGES OF ABC ANALYSIS
▪ Easy to control the wastage of items
▪ Helps in maintaining safety to the total cost
▪ Easy to maintain stock and turnover rate
▪ Helps to point out obsolete stocks easily.
▪ Helps better planning of inventory control
▪ Provides sound basis for allocation of funds &
human resources.
26. DISADVATAGES
• Loose control of C item may result in shortage
• ABC focus on money value and not on
functional importance
27. VED ANALYSIS
Depending on their criticality, and their value in
the operation of the hospital, most of the items
are classified, as Vital, Essential, and
Desirable .
28. EXAMPLE
✔ Vital items-Absence or shortage of items for short
period can seriously hamper the work of the hospital
E.g. Adrenaline injection.
✔ Essential items - shortage or absence cannot be
tolerated for more than a day E.g. Transfusion
fluids.
✔ Desirable items- which are definitely needed, but
the work can continue even without them. E.g.
Aspirin, vitamins.
29. Category “V” items “E” items “D” items
“A” items Constant
control &
regular
follow up
Moderate
stocks
Nil stocks
“B” items Moderate
stocks
Moderate
stocks
Low stocks
“C” items High stocks Moderate
stocks
Very low
stocks
ABC Vs VED ANALYSIS
30. HML ANALYSIS
It is a tool used classify inventory items and
inventory control. Classified according to how
fast they move or turnover.
Cost per item (per unit) is considered for
this analysis .
32. SDE ANALYSIS
Classification based on the lead time/
availability.
S- Lead time more than 6 months
D- Less than 6 months
E-Less than fort night
34. ANALYSIS
It is based on the consumption period of the
items method.
F- item exceeding such limits of numbers of
issues during that period (DUE TO CHANGE
OF TEC)
S- up to certain limit say 10-15 issues in that
period
N- no issuing of item during that period
37. • Government suppliers: Transactions with
these suppliers involve long clerical
processing and the lead time will be long.
• Ordinary suppliers: The quality and
continuity of supply is good.
CON’T
38. CON’T
Local suppliers: From whom cash purchases are
generally made. They are usually in the market
areas of cities.
Foreign suppliers: Foreign suppliers will involve
heavy clerical work—starting with government
clearance, e.G. Obtaining an import license for
customs clearance before the foreign source of
supply is contracted.
39. XYZ ANALYSIS
XYZ classification is based on the value of the
inventory stored.
X- items are those whose inventory values are
high
Y- items are those inventory values are
moderate
Z- items are those inventory values are low
40.
41. SOS ANALYSIS
The strategies adopted for procurement and
purchasing
Seasonal items(s)
Off- seasonal items (OS)
Seasonal items
42. Types of items Strategy
Seasonal items(s) which are available
only for a limited period
Procure and stock for meeting the
needs of the full year
Off- seasonal items (OS) Quantity is determined on different
Seasonal items available throughout
the year
The quality required should be
compared with the cost savings on
account of lower prices.
44. LAST-IN FIRST-OUT (FIFO)
Most recent products in inventory will be sold
out.
This method uses current prices to calculate the
cost of goods sold.
48. CYCLIC SYSTEM
This is a periodic inventory system where
the physical stock position is reviewed at periodic
fixed intervals and orders are placed depending
on the stock on hand and rate of conception.
49. TWO BIN SYSTEM
✔ Perpetual inventory system where the stock of
each item is held in two bins
✔ Also called min-max system
✔ The first bin is intended for supplying current
demand
✔ Second for satisfying demand during the period of
replenishment.
51. LEAD TIME
This is the time required
to obtain the supply once
the need is determined,
i.e. it is the average
number of days between
placing an order and
receiving the materials.
52. RE ORDER POINT / LEVEL
ROP is the pre determined stock at which
an item is to be reordered for replenishing the
stock. At this level a fresh recoupment purchase
requisition is raised so that the supplies will arrive
when the stock reaches the minimum level.
54. MINIMUM STOCK OR SAFETY STOCK
OR BUFFER STOCK
This amount of stock should be kept in reserve
to avoid a stock-out in case of conception increases
unexpectedly or in case the lead time turns outs to be
longer that normal. It is also the level at which fresh
supply should normally arrive.
55. MAXIMUM STOCK
This is the pre determined limit beyond which
the stock of an item should not be allowed to go in
normal course. It is equivalent to the minimum
stock level plus the quantity of supplies received at
any point of time. Maximum level is used for
controlling investment.
56. TURNOVER OF INVENTORY
Inventory turnover is the qualitative
measurement.
how many times a organization has sold and
replaced inventory during a given period.
57. ROLE OF NURSE IN INVENTORY
CONTROL
• Keeping on adequate amount of equipment and
supplies in the ward
• Make sure that equipment and supplies are in
good conditions
• Put in a requisition for necessary equipment for
repair and maintenance when needed
• Make sure that equipment & supplies are
conveniently located
• Observant of waste and misuse
• Delegate someone the responsibility for
handling supplies & equipment
58. SUMMARY
Inventory control is a challenging
task and the nurse manager
always has to be vigilant enough
in material management to have
cost benefit to the organization.
59. CONCLUSION
Inventory management has to do with
keeping accurate records of goods that are
ready for utilization also it is an important
management tool which will be very useful in
getting the right quality & right quantity of
supplies at right time for proper management.
60. RECAPITULATION
Q. Buffer stock is the level of stock
A) half of the actual stock
B) At which the ordering process should start
C) Minimum stock level below which actual stock
should not fall
D) Maximum stock in inventory
61. Q) The time period between placing an order
its receipt in stock is known as
A) Lead time
B) Carrying time
C) Shortage time
D) Over time
Q) Expand GOLF
62.
63. REFERENCE
▪ Johindra Vatti (2013), Principles and practice
of nursing services and education, 1st Edition,
jaypee brothers medical publishers, page no:
403-404
▪ Basavanthappa B.T. (2009), Nursing
administration.(2nd ed). Newdelhi: jaypee
brothers medical publishers.
64. REFERENCE
▪ Deepak.K (2013), A Comprehensive
Textbook of Nursing Management.(1st edition)
Emmess Medical Publishers.
▪ Gopalakrishnan & Sunderasan: Material
Management, Prentice Hall of India Pvt Ltd.
New Delhi, 1979.
▪ Kulkarni G R. Managerial accounting for
hospitals. Mumbai: Ridhiraj enterprise; 2003.
65. REFERENCE
▪ Kumar R& Goel SL. Hospital administration and
management. Vol 1 ( first edn).New Delhi:
Deep & deep publications;
▪ Gupta S& Kanth S. Hospital stores
management, an integrated approach.( First
edn). New Delhi: Jaypee brothers; 2004.
