Inventory management involves systematically overseeing materials from procurement to disposal. It aims to minimize costs while maintaining adequate stock levels. Key aspects of inventory management include identifying stock needs, acquiring and controlling stock according to industry type and service level goals, properly storing and recording inventory, verification of stock levels, and disposal of unneeded items. The overall goal is to balance uninterrupted operations with economical inventory levels.

1. INVENTORY MANAGEMENT
DR. S.D.U.M.Ranga
MBBS, MSc, MD, DIPPCA
Health system specialist
Sri Lanka

2. What is inventory
 Raw material or components
 Semi finish goods
 Finish goods
Inventory management
Systematic process
overseeing and planning, operating, maintaining,
upgrading and replacing of materials
7/30/202
1
Dr. S.D.U.M.Ranga 2

3. INVENTORY
MANAGEMENT………………..
 integrated with planning of the industry or service.
 strategic approach according to the
 type of industry
 expected level of service delivery
 service arrangement
 to minimize the inventory handling cost and ordering
cost,
 in the same time maintaining a level of service delivery.
7/30/202
1
Dr. S.D.U.M.Ranga 3

4. INVENTORY
MANAGEMENT…………………
 long vision concept, managing for future
 considering changes of
o environment, market changes,
o policy changes
o technical changes
 with evaluating risk of above changes.
7/30/202
1
Dr. S.D.U.M.Ranga 4

5. steps in public inventory
management process
.
 Inventory need identification
 Acquisition of items
 Inventory control
 Store keeping, Record keeping and ware housing
 Codification
 Verification
 Disposal of inventory items
7/30/202
1
Dr. S.D.U.M.Ranga 5

6. NEED IDENTIFICATION
 Type of industry-raw material easily available or not
-essential service- safety stock
 Level of service delivery
 Company strategy- use own labor/ subcontracting
7/30/202
1
Dr. S.D.U.M.Ranga 6

7. ACQUISITION OF STOCKS
 Through suitable procurement method
 Specifications of material/ product
 Life cycle cost
 Method of purchasing – JIT
- MRP (material requirement
planning on sales forecast)
7/30/202
1
Dr. S.D.U.M.Ranga 7

8. STOCK CONTROLLING
Base on
 Uninterrupted service delivery
 Maintaining an economical inventory
For that consider,
 Effective control of receipts and issues
 Adequacy and safety of materials stocked
 Good turnover of stock
 Maintenance of the lowest quantities needed to
maximum utilization while reducing ordering cost
 Effective and economical handling and distribution of
stocks (stock out cost)
 Minimization of the cost of holding stocks
7/30/202
1
Dr. S.D.U.M.Ranga 8

9. STOCK
CONTROLLING………………………..
There are three methods to control the stocks
 Visual method
 Selective method
 Specific models based on quantities – control by
quantities
Issue orders
o FIFO
o FEFO
o LIFO
7/30/202
1
Dr. S.D.U.M.Ranga 9

10. STORE KEEPING, RECORD
KEEPING AND WAREHOUSING
 Location of warehouse
 Lay out of warehouse
 Arrangement of pallets, racks, bulks, etc
 Safety
 Optimum condition
 Quality control mechanism
 Quarantine until examine/ quality approved
 Policy for limited stock distribution
 Record keeping- inputs, outputs, breakdown, repair
7/30/202
1
Dr. S.D.U.M.Ranga 10

11. CODIFICATION
 Accurate and logical identification
 Prevention of duplication
 Standardization and reduction of varieties
 Efficient purchasing
 Easy computerization
7/30/202
1
Dr. S.D.U.M.Ranga 11

12. VERIFICATION
 Check whether the inventory book have been balanced at
the end of each financial year and its accuracy.
 Cross check the physical balance with the inventory book
balance.
 Submit a completed forms and a report to the accounting
officer
 of copy of report to the auditor general,
 obtains explanation for the differences,
 grants authority to adjustment and write offs or
 send report with recommendation to the chief accounting
officer - take necessary action.
 update inventory books having write off recommendations.
7/30/202
1
Dr. S.D.U.M.Ranga 12

13. DISPOSAL OF INVENTORY
ITEMS
 Keeping non using item do not incur any value addition
to the item,
 instead it causes to increase the
 handling cost,
 volume cost (occupying space which could be use for
another purpose) and
 time cost which means every time material lying in
stock, something is added to its cost but nothing to its
value.
7/30/202
1
Dr. S.D.U.M.Ranga 13

14. DISPOSAL……………………………….
 Condemning board
Unserviceable item- ------ Tradable
-------Untradable
Tradable item should be valuation by valuation board
Selecting disposal method consider,
 national security
 potential threats to civil societies
 health and safety issues and hazards
 major repairs made by recently
 environmental considerations
 Possibility of transferring to another authority
7/30/202
1
Dr. S.D.U.M.Ranga 14

15. MSD drug store
7/30/202
1
Dr. S.D.U.M.Ranga 15

16. Baldly managed store

7/30/202
1
Dr. S.D.U.M.Ranga 16

17. Well managed store
7/30/202
1
Dr. S.D.U.M.Ranga 17

18. Thank you
7/30/202
1
Dr. S.D.U.M.Ranga 18