ACTIVITY INVENTORY MANAGEMENT

4 WORKSHEET (INDIVIDUAL)

Name: Hirschmann Andro B. Boquila

1. Define the following terms

Terms
A conceptual component of item inventory wherein cycle stock
depletes gradually as customer orders are received and is
Cycle Stock replenished cyclically when supplier orders are received (Pittman &
Atwatar, 2022).

A conceptual component of the item inventory which is a cushion of

protection against uncertainty in the demand or in the replenishment
Buffer/Safety Stock
lead time (Pittman & Atwatar, 2022).

Stock inventory that is kept on hand because of expected future

Anticipatory/Speculative demand or expected price increase (Zgarrick et al., 2020).
Stock

Requires the pharmacist or designated person to look at the

number of units in inventory and compare them with a listing of how
Visual Method (Inventory
many should be carried. When the number falls below the desired
Control)
amount, an order is placed (Zgarrick et al., 2020).

Requires the pharmacist or designated person to count the stock in

hand at predetermined intervals and compare it with minimum
Periodic Method (Inventory
desired levels. If the quantity is below the minimum, the product is
Control
ordered (Zgarrick et al., 2020).

The entire inventory may be entered into the computer, and with the
filling of each prescription, the appropriate inventory can be reduced
Perpetual Inventory System
automatically (Zgarrick et al., 2020).

Reduction of actual quantities in stock, in process, or in transit. The

loss may be caused by scrap, theft, deterioration, evaporation, and
Shrinkage
so forth (Pittman & Atwatar, 2022).

An accounting classification useful for determining the amount of

direct materials, direct labor, and allocated overhead associated
Cost of Goods Sold (COGS) with the products sold during a given period of time (Pittman &
Atwatar, 2022).

Measures how quickly, on average, an organization’s inventories

Inventory Turnover Rate are sold (Pittman & Atwatar, 2022).
(ITOR)
 A type of fixed order quantity model that determines the amount of
an item to be purchased or manufactured at one time. The intent is
Economic Order Quantity
to minimize the combined costs of acquiring and carrying inventory
(EOQ)
(Pittman & Atwatar, 2022).

An automated way of creating bulk purchase agreements between

Purchase Order System the buyer and vendor. The system monitor stocks, what products to
(POS) buy, when to buy, and how much to buy (Cavintek Inc., 2023).

Storage in dry, well-ventilated premises at temperatures of 15–25

°C or, depending on climatic conditions, up to 30 °C. Extraneous
Normal Storage Conditions odors, other indications of contamination, and intense light must be
Excluded (World Health Organization, 2003).

Drug products that must be stored under defined conditions require

appropriate storage instructions. Unless otherwise specifically
Defined Storage stated (e.g. continuous maintenance of cold storage) deviation may
Instructions be tolerated only during short-term interruptions, for example,
during local transportation (World Health Organization, 2003).

Logistics management process for products that require the

refrigerated temperatures that customers demand. It’s a process
Cold Chain Management since it involves performing a chain of tasks to prepare, store, and
transport products along the cold supply chain (Logmore, 2022).

2. Give 5 examples of drugs requiring special storage conditions. Describe the proper storage
requirement for each.

PRODUCT NAME STORAGE REQUIREMENT

Store between 8°C-15°C. Keep container tightly closed in a cool, dry
Rhea Glycerin Suppository place (MIMS, 2023).

Store in the refrigerator in 2°C-8°C. Do not freeze (MIMS, 2023)

Insulin glargine (Basagine)

Amoxicillin + Clavulanic Store in a dry place at below 30°C in the original packaging to
Acid (Augmentin) Oral protect from moisture. Once reconstituted, the suspension must be
Suspension stored in a refrigerator (2°C to 8°C) (MIMS 2023).

The product must be kept in a fridge at 2°C to 8°C (Stewart, 2021).

Chloramphenicol eye drops

Store unopened bottle(s) under refrigeration at 2° to 8°C (36° to

Latanoprost eye drops 46°F). Once a bottle is opened for use, it may be stored at room
temperature up to 25°C (77°F) for 6 weeks (FDA, n.d.)
3. How would you interpret inventory turnover rate? Explain how you can use inventory turnover rate in
merchandising (maximum of 5 sentences).
Inventory turnover rate can be interpreted as how strong or weak a product can be sold in the
market. We can make use of this information on how much we can procure for a period of time in
order to meet the demands for the product. If there is a product that is very much in demand, we can
increase the amount in the inventory so it would not go out of stock but also not go beyond the
demand. If there is a weak selling product, we can limit the amount to procure for a time to avoid
expiry and such. In essence, we can use the inventory turnover rate by sticking to an amount of a
product in the inventory to avoid expiry/degradation, stock out, or surplus.

4. A pharmacy manager is tasked to determine the reorder point for a pharmaceutical product. The product
is given as a maintenance medication, taken OD. On average, the pharmacy served 60 patients buying
monthly stocks of the medicine last year. It takes 1 week for stock checks and the supplier takes 3 weeks
to deliver the product from the date the order is placed. If the safety stock is set to be 2,000 units, compute
for the reorder point.

𝑅𝑒𝑜𝑟𝑑𝑒𝑟 𝑝𝑜𝑖𝑛𝑡 = [(𝑟𝑒𝑣𝑖𝑒𝑤 𝑡𝑖𝑚𝑒 + 𝑙𝑒𝑎𝑑 𝑡𝑖𝑚𝑒) × 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑑𝑒𝑚𝑎𝑛𝑑] + 𝑠𝑎𝑓𝑒𝑡𝑦 𝑠𝑡𝑜𝑐𝑘

𝑢𝑛𝑖𝑡𝑠
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑑𝑒𝑚𝑎𝑛𝑑 = (60 𝑝𝑎𝑡𝑖𝑒𝑛𝑡𝑠 × 30 ) ÷ 4 𝑤𝑒𝑒𝑘𝑠
𝑝𝑎𝑡𝑖𝑒𝑛𝑡
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑑𝑒𝑚𝑎𝑛𝑑 = 450 𝑢𝑛𝑖𝑡𝑠/𝑤𝑒𝑒𝑘

𝑅𝑒𝑜𝑟𝑑𝑒𝑟 𝑝𝑜𝑖𝑛𝑡 = [(1 𝑤𝑒𝑒𝑘 + 3 𝑤𝑒𝑒𝑘𝑠) × 450 𝑢𝑛𝑖𝑡𝑠/𝑤𝑒𝑒𝑘] + 2000 𝑢𝑛𝑖𝑡𝑠

𝑹𝒆𝒐𝒓𝒅𝒆𝒓 𝒑𝒐𝒊𝒏𝒕 = 𝟑, 𝟖𝟎𝟎 𝒖𝒏𝒊𝒕𝒔

References
Cavintek, Inc. (2023). Purchase Order Management System. Retrieved from https://www.cflowapp
s.com/purchase-order-system/#:~:text=A%20purchase%20order%20system%20can,and%20how
%20much%20to%20buy.

Food and Drug Administration (n.d.). Latanoprost. Retrieved from https://www.accessdata.fda.gov

/drugsatfda_docs/label/2012/020597s044lbl.pdf

Logmore (2022). What is Cold Chain Management. Retrieved from https://www.logmore.com

/post/cold-chain-management

MIMS (2023). Augmentin. Retrieved from https://www.mims.com/malaysia/drug/info/augmentin

?type=full#:~:text=AUGMENTIN%20tablet%20packs%20contain%20desiccant,and%20used%20
within%207%20days.

MIMS (2023. Basagine. Retrieved from https://www.mims.com/philippines/drug/info/basagine/storage

MIMS (2023). Rhea Glycerin Suppository. Retrieved from https://www.mims.com/philippines/drug/inf

o/rhea%20glycerin%20suppository?type=full

Pittman, P.H. and Atwatar, J.B. (2022). ASCM Supply Chain Dictionary (17th ed.). APICS, Inc
Stewart, M. (2021). Chloramphenicol for eye drops. Retrieved from
https://patient.info/medicine/chloramphenicol-for-eye-infections-brolene-antibiotic-brochlor-
clorogen-eykappo-golden-eye-antibiotic-minims-chloramphenicol-optrex-infected-
eyes#:~:text=Chloramphenicol%20eye%20drops%20(including%20single,from%20direct%20heat
%20and%20light.

World Health Organization (2003). Annex 9: Guide to good storage practices for pharmaceuticals.
Retrieved from https://www.fda.gov.ph/wp-content/uploads/2021/03/World-Health-Organization-
Good-Storage-Practices.pdf

Zgarrick, D.P., Moczygemba, L.R., Alston, G.L., and Deselle, S.P. (2020). Pharmacy Management:
Essentials for All Practice Settings (5th ed.). McGraw-Hill Companies, Inc.