Hospital Inventory

Chapter One: Introduction

This chapter introduces back ground of the study, problem statement, objective, scope, limitation and significance of the study.

1.1. Background of the Study

Inventory is the stock of any item or idle stock of material in store to keep against uncertainty permit wholesale purchasing, reduce waiting time, buffer against seasonal variation, and facilitate production or service in an organization to satisfy customer wants. Inventory items differ with manufacturing organization and service organization. It is the sum of raw materials; work in process and finished goods at any given time (Chase et al., 2004).

Inventory management is a systematic method of isolating items that need greater care for control. ABC analysis

Hospitals require an effective inventory management for maintaining a balance between inventory investment and demands for supplies. The basic issue involved in inventory management in hospital is to ensure that adequate amount of drugs are available to meet the demand of the hospital, while at the same time ensuring that too much inventory is not accumulated and also there are no stock-outs in the hospital (Bhatnagar, 2009). The inventory management can bring out significant improvement not only in patient care but also in the optimal use of drugs (Vaz, 2008). In hospital high quantities of inventory in form of large number of costly drugs and supplies would be harmful, which enhance the expenditure of the hospital (Bhatnagar et al.,

But it is not enough to judge the real class of items by single criteria. Drug Therapeutic Committee (DTC) has listed out more than 3000 drugs in Ayder referral hospital, which are classified by VEN/VED (Vital, Essential, and Non-essential or desirable) analysis. As the hospital document (model 22) shows out of 3000 drug types around 412 drugs fluctuate on stock out and over stock levels. These problems are happened due to use of non multi criteria inventory classification along with EOQ model on their organization. To overcome these problems ABC-VED analysis, forecasting techniques and EOQ models were used. Because ABC (always better control) and VED (vital, essential and desirable) matrix is the most preferred for medical stores (Jha, 2001). The tool used to analyze this research were micro soft excels