Quantitative measurements of inventory control

Abstract

The use of quantitative measurements for improving inventory management efficiency in hospital pharmacy is reviewed. Proper management of the pharmacy inventory affects the financial operation of the entire hospital. Problems associated with maintaining inadequate or excessive inventory investment are discussed, and the use of inventory valuation and turnover rate for assessing inventory control efficiency is described. Frequency of order placement has an important effect on inventory turnover, carrying costs, and ordering costs. Use of the ABC system of inventory classification for identifying products constituting the majority of inventory dollar investment is outlined, and the economic order value concept is explained. With increasing regulations aimed at controlling hospital costs, pharmacy managers must seek every possible means to improve efficiency. Reducing the amount of money obligated to inventory can substantially improve the financial position of the hospital without requiring a reduction in personnel or quality of service.