BUDGET PLANNING AND INVENTORY CONTROL

Presentation By :- G.HARITHA RANI

UNDER THE GUIDANCE OF :– Mrs. J.PRASANNA KUMARIASSISTANT PROFESSOR, M.Pharm,(Ph.D)DEPARTMENT OF PHARMACEUTICS.

B.PHARMACY 4th YEAR

ROLL NO: 0160824

CONTENTS

INTRODUCTION TO BUDGET PLANNING & INVENTORY CONTROL

CONTENTS IN BUDGET PLANNING

DEFINITION TYPES OF BUDGET PLANNING

GOALS DIVISIONS OF BUDGET PLANNING FUNCTIONS IMPLEMENTATION OF BUDGET PLANNING

RESPONSIBILITIES ADVANTAGES OF BUDGET PLANNING

CONTENTS OF INVENTORY CONTROL

DEFINITION OBJECTIVES TECHNIQUES

CONCLUSION

BIBILOGRAPHY

DEFINITION: Financial or a quantitative statement prepared for the purpose of attaining a given objective. It is more than a forecast ofincome and expenditure that reflects the policy being implemented.

GOALS : 1)For the development of standard of performance. 2)Comparison of the actual results with the standards for identifying deviations. 3) Subsequent analysis of deviations to determine whether they are controllable or uncontrollable.

FUNCTIONS : 1) The responsible person will use the budget details to determine whether the proposal is economically feasible and realistic. 2) Budget provides a means to monitor the hospital financial activities. 3) The main function is to estimate the cost of completing the objectives identified in the proposal.

Types of budget preparation: - Short term budget ( 2 years). - long-term budget (5 - 10 years).

Divisions of budget: 1. Income or revenue accounts. 2. Expense accounts. 3. Capital and equipment budget.

Income or revenue accounts: 1) Total income must be calculated for the proper implementation of the budget. 2) Department of the pharmacy or the accounting department maintains daily, weekly ,monthly & annual cost of the pharmaceuticals issued to different patient services & to the special service departments. 3)True income of the department is the some of the pharmaceuticals issued to the patient based on their prescriptions and to the other departments.

4) The other statistics that are valued to accurately predict the activity of department of pharmacy are…

a) Total number of prescriptions . d) Per day average supply cost of medication. b) Total hours of service. e) Average salary cost per prescription. c) Prescription volume per hour.

EXPENDITURE ACCOUNTS: Total expenditure in hospital depends upon

1) Professional care of patients. 3) Administrative and general expenses. 2) Out patient expenses . 4) Emergency and miscellaneous expenses.

The expenditure accounts consists of following categories

a) Expense accounts for salaries and wages d) Drugs and pharmaceuticals b) Expenses of supplies and materials e) Expenditure on over time positions c) Purchase expenses

Total expenditure=administrative + professional + non professional staff

EXPENSES OF SUPPLIES AND MATERIALS:

1) The responsible person or the chief pharmacist should prepare a financial statement considering the requirement of amount in rupees for supplies and materials with the help of latest available financial statement.

2) It is also necessary to show the actual cost of the materials and supplies.

3) If the budgeted figure and the estimated actual figure are same then the previously prepared budget was estimated to be well done.

EXPENSE ACCOUNTS FOR SALARIES & WAGES:

Total expenditure= administrative + professional+ non professional

PURCHASE EXPENSES: The budget of purchase expenses should include the cost of prescriptions purchased from outside pharmacy.

DRUGS AND PHARMACEUTICALS :• Many drugs are dispensed by prescription in the hospital pharmacy departments.• Some drugs used by out patients &emergency department should be charged separately but not in this account.

EQUIPMENT AND CONSTRUCTION BUDGET :

1) Budget for immediate arrangement of a new model equipment is also required.

2) It is necessary that the actual cash for replacement or remodeling of equipment should be budgeted. 3) If proper budget in hospitals is not a policy, then the construction of purchase of equipment creates a major problem.

ADVANTAGES OF PLANNING THE BUDGET:

1) Can develop better financial planning 4) Exposes reasons for over expenditure 2) Gives a clear focus on decision making 5) Helps to focus on hospital priorities to the management

3) Can effectively manage the finance of the 6) Enhance efficiency of staff and others hospital

IMPLEMENTATION OF A BUDGET:

Implementation of a budget is a difficult task and involves following parameters. a) Requirement of different departments d) Cost of products

b) Actual fund position e) Quantity of products

c) Utility of particular item

INVENTORY CONTROL AND BUDGET PLANNINGDEFINITION

• A scientific method of finding out how much stock should be maintained in order to meet the production demand.• Helps to provide right type of material at right time in right quantities.

INVENTORY CLASSIFICATION: 1) Raw inventories: include raw materials and semi finished goods.2) In process inventories : semi finished goods at various stages of manufacturing cycle.3) Finished inventories : finished goods in stock rooms.4)Indirect inventories : includes lubricants and other items for proper operation, repair & maintenance during manufacturing cycle

OBJECTIVES OF INVENTORY CONTROL:

• The main purpose of having an inventory control is

a) To supply the drug in time. d) To avoid shortage of stock.b) To give maximum customer service. e) To avoid wastage of stock.c) To reduce or minimize investment

TECHNIQUES OF INVENTORY CONTROL

• ABC analysis

• Economic Order Quantity (EOQ)

• VED analysis

• Perpetual inventory system

• Review of slow and non moving items

• Setting of various levels

• Buffering stock

• Modern computerization of inventory control

INVENTORY CONTROL METHODS

ABC( Always Better Control )

HML(High Medium Low)

VED(Vital Essential Desirable)

FSN(Fastmoving Slow moving Nonmoving)

GOLF(Government Ordinary Local Forigen)

SOS(Seasonal Off Seasonal)

ABC ANALYS IS :It is the very common tool in all drug stores where large inventory items are stocked.A=ALWAYS B=BETTER C=CONTROL

ADVANTAGES :

1) Investment in inventory can be maintained. 3) Helps in maintaining safety of total stock.

2) Easy to control the wastage of costly items. 4) Easy to maintain stock and turn over rate.

A-CLASS B-CLASS C-CLASS

Costly items (10-15%)

Intermediate Class (20-25%)

Cheaper Class (60-70%)

Costly of about70-80% of total budget

Costly of about 20% budget

5-10% of total budget

INVENTORY CONTROL TECHNIQUES

EOQ:1) Easy technique to estimate how much of the inventory is to be Ordered.2) Also useful for avoiding some expenditure which are not generally required.3) The ordering costs consists of stationary, stock quantity, storage and receiving etc.

Formula:

EOQ =

A = Demand for the year .Cp = Cost to place a single order .Ch = Cost to hold one unit inventory for a year. * = ×

INVENTORY CONTROL TECHNIQUES

VED ANALYSIS :

1) This analysis is based on utility of material in the drug store .

2) It is useful in controlling & maintaining the stock of various types of formulations of a particular group of drugs.

3) Drugs are classified into the following categories .

V=VITAL (Anacin) E=ESSENTIAL (dispirin) D=DESIRABLE (micropyrine)

4)The categories may change based on the demand. Ex: aspirin

INVENTORY CONTROL TECHNIQUES

PERPETUAL INVENTORY SYSTEM:1) This is an ideal method for maintaining the records up to date.2) For small pharmacies - PEG boards.3) For large pharmacies - INTERNATIONAL BUSINESS MACHINES (IBM).4) Perpetual inventory system comprises of three parts. a) Bin card b) store ledger c) continuous stock taking

INVENTORY CONTROL TECHNIQUES

STORE LEDGER:1) Very useful inventory control system.2) Store ledger consists of leaf cards for easy removal and insertion.3) Useful to maintain all costly items .

Continuous stock taking:1) In this method limited items are verified.

2) The items are selected based on their utility.3) Selected number of items were collected everyday and matched with bin card and store ledger.

SETTING OF VARIOUS LEVELS:1)To maintain inventory control.2) It consists of various levels a) Maximum b) minimum c)reorderLevel of stock is fixed by considering the following points: -Nature of material - Storage space available -Market trend - Fashion habits MAX LEVEL=RE-ORDER LEVEL + REORDER QUANTITY +MINIMUM CONSUMPTION

MODERN COMPUTERISATION OF INVENTORY CONTROL:In all these days all purchasing and inventory control are made by computer application.NIC-NATIONAL INFORMATICS CENTRE has developed software for maintaining the inventory control records throughout the year.

Ad v a n t a g e s1) Very fast 3)

Minimum investment2) Multiplies data in shortest period 4) Min

spaceBUFFER STOCK:• Used to meet unexpected demands• Helpful in emergency conditions

INVENTORY CONTROL TECHNIQUES

CONCLUS ION:BUDGET is an important tool in any hospital or organization.

Preparation and implementation of budget both are important for proper Functioning of a hospital.

To increase the standards of a hospital & maintains small and big requirement in the hospital.

Inventory control is required for the proper maintenance of stock in the hospitals and helps to Supply drugs in right time in conditions of EMERGENCY.

BIBILOGRAPHY

1.Dr.H.P TIPNIS & Dr AMRITA BAJAJ- HOSPITAL PHARMACY, Career Publications, pg no:111-126.

2. NK.JAIN & GUPTA -MODERN DISPENSING & HOSPITAL PHARMACY,Pg N o:123-130.

3.O.P KHANNA- PHARMACEUTICAL BUISNESS MANAGEMENT, Dhanpat Rai Publications, pg no:24.1-24.16.

4.PRATIBA NAND & Dr.ROOP K.KHAR ,HOSPITAL & CLINICAL PHARMACY, Birla Publications, pg no: 38-52.

5.Dr.J.S QADRY, Dr.RAMESH,TEXT BOOK OF HOSPITAL PHARMACY, pg no: 64-82.

6. http://en.wikipedia.org/wiki/budget planning and inventory control

7. http://www.budgetplanning.com/ intro.htmml

8.http://findarticles.com/p/articles/mi moFBN/IS 4 7 ai 91155408