What is an Inventory Control System?
A collection of people, equipment, and procedures that tells us what we have in stock, what we sold, what we purchased, and what we need to purchase.
How does a pharmacy determine what type of inventory control system is most suitable?
- size of store/pharmacy
- cost and affordability
- size of staff
- incentive from sales reps
6 criteria for managing inventory effectively:
- maintain acceptable levels
- track usage with system (manual, computer, electronic)
- good return procedures/system
- physical count yearly
- verify system, modify for improvements
Explain how too much inventory "consumes" cash.
- loss of revenue & profit from expired drugs/merchandise
- no $$ to purchase new products, therefore require bank loans/credit
- interest rates on bank loans/credit, risk of bad credit
- increase in fees
- increase in rent/lease
- increase in insurance
- ordered too much product> return> supplier charge restocking fees
- supplier wants C.O.D. or cut off
4 benefits for good inventory control
- increased sales
- save money
- ability to pay cash
- customer satisfaction
- better image and reputation
- save time and employee hours
- satisfied employees
- room to grow (hire more employees, expand business)
- able to provide employee raises
6 conequences of poor inventory control
- staff reordering & return time wasted
- too much stock,
- higher insurance rates
- restocking fees for stock returned
- poor image and reputation
- unhappy employees
- bad credit
- stress due to extra work
Identify the inventory methods discussed in class.
wantbook, visual, periodic, computerized, POS.
3 advantages of the wantbook method
- more accurate than visual
- second look
- max/min guideline
3 advantages of the visual method
- based on experienced staff
- easy and convenient
- no technical equipment, no technical errors
- costs only employee time
3 advantages of periodic method
- all info on card
- most accurate manual system
3 advantage of computerized system (for drugs)
- most accurate
- prints drug usage reports
- can read which drugs most used
3 advantages for point of sale (POS)
- most high-tech
- generates very detailed reports
- reduces inventory costs and increases profits
What is the difference of "tangible and intangible assets"?
Tangible assets are the physical assets you can touch (e.g. inventory, supplies, computer, etc.,) whereas intangible assets are those assets you cannot see or touch, such as your company's good will, reputation, titles, shares, etc..
According to OCP, what are some common security guidelines?
- security cameras
- good lighting
- clutter free windows
Describe the purpose of the Meth Watch program
- increase awareness by retail employees and management of meth production
- increase awareness about how precursor chemicals are diverted from legal products into illegal manufacture of meth
- promote cooperation between retailers and law enforcement
- reduce meth productiion without disrupting availability of legal products
What is the #1 drug targeted by forged prescriptions?
Explain Pareto's Law.
Group inventory into A, B, and C classes according to low, medium, to high priced... and keep an eye on your high priced group if you want to manage your inventory effectively. everything will fall into place.
Define the term: Inventory Turnover
A measure of the number of times inventory is sold or used in a time period such as a year.
- annual purchase dollar
- annual inventory dollar
It is a tool used to determine how well inventory is managed
Define "Private Label Lines"
Private label products or services are typically those manufactured or provided by one company for offer under another company's brand. E.g. Life brand at Shopper's Drugmart
What is the difference between "direct buying" and "wholesaler buying"?
in direct buying, you are purchasing from the manufacturer directly
in wholesaler buying you are purchasing from a retail dealer who gets their products from manufacturer
- advantages: bulk, deals,
- disadvantages: small pharmacy therefore no need to purchase in large bulks, longer wait
- advantages: buy small quantities, ordering equipment provided, delivery
- disadvantages: costs more,
List 3 methods of ordering.
- EDE (electric ordering equipment)
- purchase orders
- POS systems
drugs out of stock from wholesaler
time you have to pay invoice
terms of payment
financial details and any discounts given
product that will expire very soon
procedures for receiving pharmaceuticals from wholesaler
- enter into system
- sign invoice, and date
- put inventory away in proper place
procedures for returning pharmaceuticals from wholesaler
- gather stock to be returned (must be in perfect condition)
- fill "request for credit" form
- wait for authorization
- ship product to wholsaler
- pay restocking fee, if applicable*
- (narcotics may be returned provided they are unopened and prior authorization is given on separate RPC form)
retail price = cost/mark-up factor
[MU=(100- % )/100]
- e.g. calculate the retail price for an item that costs $10.00 when the desired gross margin is 20%
therefore, item will sell or $12.50
cost = retail price x markup factor
[C=R x MU]
e.g. calculate the cost of an item that sells for $15.50 with a mark-up of 40%
therefore, the cost to the pharmacy is $9.30/item