Term
| Why is inventory management and purchasing important? |
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Definition
- Pharmacy's largest current asset
- values of inventories are rising
- inventory sitting on shelves can hurt a pharmacy's financials |
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Term
| What is significant of purchasing? |
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Definition
| Buying the right products, in the right quantity, at the right price, at the right time, from the right vendor |
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Term
What are factors to consider when deciding which products to stock?
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Definition
- How much space/money is available
- Opportunity costs
- Past sales
- Target markets
- Pharmacy image and goals
- Formularies
- Industry Data
- Industry representatives
- Consumer information |
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Term
| What are the three types of inventory stock? |
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Definition
Cycle - regular inventory needed to fill orders
Buffer - safety stock against fluctuations in demand
Anticipatory stock - For expected future demand |
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Term
| What is estimation of minimum quantity? |
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Definition
•How much is on hand
•At what point to reorder
•How much to order
•Reorder point = (Review time + lead time) x average demand +safety stock
•EOQ – refer to pg. 388
•Budget is also a consideration
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Term
| What do you take into consideration when setting the Right Price? |
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Definition
•Terms of sale
–Discounts
–Dating
•Types of discounts:
–Quantity discounts
•Non-cumulative – 10 for $10
•Cumulative – Buy 2 and get 1 50% off
–Cash discounts – small discounts for prompt payments of invoices
–Serial discounts – taking advantage of both quantity and cash discounts
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Term
| How do you select the right vendor? |
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Definition
•Should have a primary and secondary vendor
•Selection of vendors – refer to table 22-4
•Types of vendors:
–Wholesalers – full-service
–Manufacturers – substantial minimum quantity
–Group purchasing organizations (GPOs) – Organizations that set themselves up and do all the buying for a pharmacy group
–Pharmacy buying groups – associate with one particular wholesaler
–Cooperatives – owned and operated by pharmacists
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Term
| What are the types of inventory costs in inventory management? |
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Definition
•Stock of products held to meet future demand
•Four types of inventory costs:
–Acquisition – cost of product
–Procurement – cost of purchasing
–Carrying costs – storage, handling, insurance, interest, deterioration
–Stock-out – cannot quantify but it can be substantial
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Term
| How do you evaluate inventory management? |
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Definition
•Inventory Turnover Rate =
–Cost of good sold/average inventory value (at cost)
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Term
| What are the three common methods of inventory management? |
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Definition
–Visual method – look at number of units and compare against what should be carried
–Periodic method – count stock on hand at predetermined intervals (weekly) and compare against minimum desired levels
–Perpetual inventory – computerized, most efficient
•Calculates EOQs, reorder points
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Term
| What are some factors to consider in inventory management? |
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Definition
•Selection of generic products
•Reduction of inventory size
•Returned goods policies
•Management of unclaimed prescriptions
•Monitoring shrinkage – THAT’S WHAT SHE SAID
•Use of formularies
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Term
| What is the role of technology in inventory management? |
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Definition
•Critical to inventory management
•Reporting:
–Purchase trend report
–Sales analysis report
–Item-movement report
•Web-based systems allow managers to manage purchasing, order status and inventory at wholesalers
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Term
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Definition
•Radio frequency identification
•Microchips to change way products are distributed
•Chips can track:
– where the products was manufactured
–When it was stocked on the shelf
–When the product leaves the shelf (with reorder capabilities)
–May protect against theft
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