DRUG STORE

MANAGEMENT AND
INVENTORY
CONTROL
-HUZAIFA ANSARI
INTRODUCTION
 DRUG STORE

• A drug Store/Pharmacy/Community Pharmacy/chemist's is a retail

shop which provides prescription drugs, among other products.
• At the drug store, a pharmacist oversees the fulfillment of medical
prescriptions and is available to give advice on their offerings of over
the counter drugs.
• A typical pharmacy would be in the commercial area of a community.
• Every hospital should have a medical store for the purpose of
procuring, stocking and distributing the drugs and medicines to
various departments
ORGANIZATION OF DRUG STORE
• Stores are defined as a sub organization in any hospitals where materials obtained are
held in abeyance till inspected, approved and stocked.
• A store should have a standard specification of materials and since the store procured the
drugs on behalf of the department for regular flow of material, the condition of storage
should be proper.
 OBJECTIVE OF DRUG STORE

• To stock all drugs and accessories required in the hospital.

• To procure drugs from different sources.
• To supply drugs to the consuming departments.
• To store drugs required in research work
• To preserve records of receipt and issue of drugs.
• To maintain records of receipt and issue of drugs.
• To carry out all operations regarding drugs economically to save
 GOOD LAYOUT DESIGN

• Proper ventilation
• It must be located on the ground floor, close to pharmacy It must have 2 entries, one for
receiving and other for issuing of materials.
• Proper illumination
• Walls & roof should be painted with washable paint
• Sufficient no. of wooden or steel racks should be provided
• Movement of men &material should be minimized thus saving time, cost
• Fast moving items should kept near the counter while slow moving items are kept at back
of shelves.
• Bulky items should store at the bottom of shelve Surgical instruments should store in
separate racks
• Cash counter ,wrapping counter should be located near entrance
TYPES OF MATERIALS STOCKED
 TYPES OF MATERIALS STOCKED

• Sufficient number of racks should be provide

• Fire extinguishers should be provide at strategic points along with fire buckets. Material
stocked are:
• Capsules, tablets. liquid dosage form and injections
• Biological and antibiotics should store in refrigerator
• Schedule X drugs, Narcotic and psychotropic substances should store under lock and
key
• Poisons are store in separate rack, labeled as POISON
• Stock of Alcohol and alcohol containing preparation should maintain in register
• Large bulk items should be on bottom
STORAGE CONDITION
 COLD STORAGE 2-8oC)
 List A
 Sera, vaccine, Whole human blood, plasma, concentrated RBC, thrombin, inj preparation, oxytocin
inj., vasopressin inj, snake antidotes etc.

 COOLTEMP (8-25°C)
 List B
 Antibiotics, blood preparations (dried plasma, fibrinogens, thrombin).
 Hormone preparation (corticotropins, oxytocin tablets).
 Vitamin preparations (Vit A , B1, B2, B6, C, D, B complex , k). dextran inj, dextrose inj, halothane
ergot liquid extract

 ROOMTEMP (25-30°C)
 Tablet, capsule , antibiotics,

 WARM TEMP (30-40°C) multi- vitamin injection

 EXCESSIVE HEAT (ABOVE 40°C)
PURCHASE
 PRINCIPLE
 The basic purpose of purchases is to ensure continuous flow of raw materials of right quality, right
quantity, right price and from right sources.
 Another objective of purchasing is the avoidance of duplication and wastage with respect to
various items purchased.
 Some important terms explained below.

1. RIGHT QUALITY
 The basic purpose of purchases is to ensure continuous flow of raw materials of right quality, right
quantity, right price and from right sources. " Another objective of purchasing is the avoidance of
duplication and wastage with respect to various items purchased. Some important terms explained
below.

2. RIGHT QUANTITY
 Right quantity is an important parameter of purchasing for continuous supply of raw materials.
"Economic order Quantity" or any other technique maybe followed in order to avoid shortage.
3. RIGHT PRICE
 The term right price means consistent matching with the quality of drug.
 Generally tender system is followed in hospitals and the lowest bidder is chosen for supplying the
order.

4. RIGHT SOURCE
 The supplier should be dependable and capable of supplying as per requirements from time to time.
 The selection of supplier requires consideration of various factors.

5. RIGHT TIME
 Purchased department should have lead time information for all products. Lead time is the total
time period between the placing of order and receipt of material while doing purchases.
PURCHASE PROCEDURE
• Purchase procedure involves different steps for procurement of goods. They are as
under:

1. DETERMINATION OF REQUIREMENT:
• The materials to be purchased for particular period are well planned for the purpose of
their regular and continuous use.
• Purchase requisition is generally prepared by departmental heads and provides
information mentioned below.

i. Type of material to be purchased,

ii. Time of requirement,

iii. Quantity to be purchased,

2. SOURCE OF SUPPLY:
• The pharmacy and therapeutic committee sets adequate standards for the purchase of
quality drugs.
• Procurement of stores is generally done by following sources
i. Medical store depot
ii. Directorate general supplies and disposals
iii. Direct from whole sellers and manufacturers
iv. By inviting tenders
v. Emergency purchases from local market

i. MEDICAL STORE DEPOT (MSD)

 This organization has six medical store deport at Mumbai, Chennai, Calcutta, Karnal, Hyderabad,
Guwahati.
 The items purchased by these organizations are subjected to various in house tests at the testing
units in Chennai and Mumbai.
 It runs on no-profit and no-loss basis.

ii. DIRECTORATE GENERAL SUPPLIES AND DISPOSALS (DGS &D)

 DGS&D calls for tender and places the order.
 The payment is made only after the verification of inspection report by the indentor on the
prescribed Performa.
iii. DIRECT PURCHASE FROM WHOLESELLERS OR MANUFACTURER
 Direct purchases from wholesalers, manufacturers are done following a proper purchase procedure.
 Materials are then received and stocked at their relevant places under proper storage conditions.

iv. BY INVITING TENDERS

 Tenders are invited from various supplier and generally the lowest bidder is chosen for supplying the
order.
 However price and quality both are considered as well.

v. EMERGENCY DRUGS FROM LOCAL MARKET

 Items not available at MSD, DGS &D and any emergency drug which is out of stock can be
immediately purchased from local market.
 For this purchase form is prepared in duplicate, one copy is sent to the department and other copy is
retained in the pharmacy.
 This avoids the department concerned to re order the same item.
3. PURCHASE ORDER
• After selecting the supplier, the chief pharmacist or any other suitable authority prepares a
purchase order giving detailed description, specification, packaging. price and quantity
needed etc. of the items.
• This purchase order is in written form and it is the evidence of contract between the buyer
and the supplier.
• Number of purchase order copies varies from hospitals to hospital

a. The original copy is sent to the supplier.

b. One copy for accounts section.

c. One copy for purchase department.

d. One copy for the department.

e. Fifth and Sixth copy for concerned receiving department.

f. Seventh copy as history copy

4. RECEIPT OF KNOWLEDGE
• After placing the order to supplier by sending a copy of purchase order, the supplier in
return sends acknowledgement of the order saying that he will be able to supply the goods
with the terms and conditions which are mentioned in the purchase order.

5. RECEIPT OF DRUGS
• On receipt of drugs, there should be a system in the stores whereby the supply of drugs
received in the medical stores from the manufacturer are properly checked by person
specially assigned for this purpose.
• Preferably the same person is responsible for reviewing the stocks, date of expiry,
description, quantity, batch number, as mentioned in the order form.
• Random sampling can be done to make sure that products confirm to the tendered
specifications like date of expiry and visible sign of deterioration , such as change of
color ,caking etc.
• If any such deterioration is observed the matter should be reported to medical
superintendent and local drug inspector.
6. DISTRIBUTION OF DRUGS TO WARDS
• Drugs should be supplied in the original packing of manufacturers.
• However if it is not possible to do so, then that should be supplied in clean containers so
that the integrity and original properties can be preserved.
• Name and quantity of the drug should be properly labelled.
INVENTORY CONTROL
• Drug store management is based on principles of inventory control.
• Mismanagement of stores and non-applicability of Scientific and Modern techniques has
been identified as the root cause of material storage in majority of hospitals.

• OBJECTIVE OF INVENTORY CONTROL

1. To supply drug in time.

2. To reduce investment in inventories and made effective use of capital investment.

3. Efforts are made to procure goods at minimum price without bargaining the quality.

4. To avoid stock out and shortage.

5. Wastage are avoided

METHODS USED FOR THE
ANALYSIS OF DRUG EXPENDITURE
i. ABC analysis

ii. VED analysis

iii. EOQ

iv. Lead time

v. Buffer stock

1. ABC Analysis
• This technique divides inventory into three categories A, B and C based on cost of material
and annual consumption value.
A item 10% of total items which have the highest rupee percentages. require proper
storage and handling, over stocking should be avoided
B item - 20% of all items with the next highest rupee percentages.
C item -70% of all item with the lowest rupee percentages.
 CLASSES OF ITEMS

A-item B-item C-item

Close Control Moderate control Loose control
Order size of the drugs is
Order size of drugs is based Order size of drugs is based
based on the calculated
on the usage on the level of inventory
requirement
Chemicals are procured Chemicals are procured Chemicals are procured
from different sources from a few sources from very few sources
Records of receipt and Records of receipt and
No such records are kept
usage are kept usage are kept
Major focus is to reduce
Moderated focus Minimum focus
lead time
Close checks on schedule Come checks on changes in
No checks against need
revision need
Frequent ordering Less frequent ordering Bulk ordering
Expediting for prospective
Continual expediting No expediting
shortage
Accurate forecasts Less accurate forecasts Approximate forecasts
Low safety stock for less Large safety stock for up to Large safety stock for more
than 2 weeks 2-3 months than 3 months
High consumption value Average consumption value Low consumption value
 ADVANTAGES
• Gives rewarding results quickly
• Helps to point out obsolete stocks easily
• In case of A items careful attention can be paid at every step such as estimate of
requirements , purchase , safety stock, receipts inspections , issues, etc and close control
is maintained
• Helps better planning of inventory control
• Provides sound basis for allocation of funds and human resources.

 DISADVANTAGES
• Proper standardization and codification of inventory control items needed
• Considers only money value of items and neglects the importance of items for the
production process or assembly or functioning.
2. VED (VITAL, ESSENTIAL AND DESIRABLE) ANALYSIS
• It is based on utility of material, importance of item and its effect on the functioning and
efficiency of a hospital
 Vital items
• Its shortage may cause havoc & stop the work in hospital/ward/patient care.
• They are stocked adequately to ensure smooth operation.
 Essential items
• Here, reasonable risk can be taken. If not available, the work does not stop; but the
efficiency of functions in hospital/ward/patient care is adversely affected due to
expediting expenses.
• They should be sufficiently stocked to ensure regular flow of work
 Desirable items
• Its non availability does not stop the work because they can be easily purchased from the
market as & when needed.
• They may be stocked very low or not stocked.
3. ECONOMIC ORDER QUANTITY
• Economic order quantity or fixed order quantity system is the technique of ordering
materials whenever stock reaches the reorder point.
• It includes ordering cost and carrying cost.
• Ordering cost - It is the cost of ordering the item and securing its Supply
• It includes expenses from raising the indent, purchase requisition by user department till
the execution of order , receipt and inspection of material.
• Inventory carrying costs
• Costs incurred for holding the volume of inventory, insurance cost, storage and handling
cost can be calculate by tabular method.
• Calculation of EOQ
• EOQ may be calculated with the help of the following formula:

EOQ(Q)=
• Where,
 D = Demanded annual quantity (in units)
 O = Cost of ordering/placing (fixed cost)
 h = Cost of holding one unit/Annual carrying cost per unit.
4. LEAD TIME
• The lead time is the sum of the supply delay and the reordering delay.
• The lead time is the applicable duration to calculate the lead demand, the safety stock or
the reorder point through a direct quantile forecast.
• The longer the lead time, the higher the total inventory level or the larger is the safety
stock, resulting in excess of investment in inventories.
• As far as possible efforts should be made to decrease the lead time for effective inventory
control.

5. BUFFER STOCK
• Buffer stock is used in emergency to meet the unforeseen demands, in other words it
refers to minimum quantity of a particular item which must be kept in the stores of all
time.
• Buffer stocks can be calculated using the following formula
• Buffer stocks= (Maximum consumption rate / day average consumption rate/ day)X lead
time
• Buffer stocks needs following factors to be taken into consideration like;

(i) Lead time (ii) Nature of item and rate of consumption

RECORDER QUANTITY LEVEL
• It is based on the average time taken by the supplier for replenishment, maximum usage
of the item during the replenishment time, and safety stock requirement.
• It is also known as reorder point.
• Reorder level is the stock level of a particular item of inventory, at which a firm needs to
place an order for the fresh supply or replenishment of the item.
• It gives a signal regarding when to place a new order for the fresh supply of an inventory
item.
• Whereas the external factor involved in reorder level is lead time taken by the supplier.
• The main risk factor in reorder level is being out of stock and some other risk factors are
disruption in production and foregone sales.
• The following formula is used for estimation of reorder level
• Reorder level = (Average daily usage rate x Average lead time in days) " + Safety level.