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System to maximize inventory performance in a small hospital.

L P VanDerLinde

    American Journal of Hospital Pharmacy
    |January 1, 1983
    PubMed
    Summary

    A computerized inventory system combining Economic Order Quantity (EOQ) and ABC models improved hospital pharmacy performance. This system significantly increased inventory turnover and reduced stock levels while controlling costs.

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    Area of Science:

    • Hospital Pharmacy Management
    • Inventory Control Systems
    • Health Informatics

    Background:

    • Effective inventory management is crucial for hospital operational efficiency and cost control.
    • Traditional inventory methods may not adequately address the complexities of pharmaceutical stock.
    • Optimizing inventory performance can lead to significant cost savings and improved drug availability.

    Purpose of the Study:

    • To describe a computerized inventory system designed to maximize inventory performance in a small hospital setting.
    • To evaluate the impact of integrating Economic Order Quantity (EOQ) and ABC inventory models on hospital pharmacy operations.
    • To assess the effectiveness of a new purchasing strategy in conjunction with the inventory control system.

    Main Methods:

    • Implementation of an integrated inventory control system using Economic Order Quantity (EOQ) and ABC inventory models in a 146-bed hospital.
    • Utilization of a perpetual inventory control database supported by a mainframe computer for generating monthly statistics.
    • Development of inventory management reports using a hand-held computer interfaced with the perpetual inventory system, based on the EOQ model.
    • Transition of pharmacy purchasing strategy from direct accounts to a prime-vendor wholesaler model.

    Main Results:

    • The integrated ABC/EOQ system with prime-vendor involvement doubled total aggregate inventory turnover within one year.
    • A 46.5% reduction in standing inventory levels was achieved.
    • Drug costs per line item remained relatively constant despite general price increases.
    • The system effectively reduced overall inventory operation costs.

    Conclusions:

    • The application of a computerized ABC/EOQ inventory model to an online perpetual inventory control database significantly enhances inventory management in hospital pharmacies.
    • The integrated system leads to substantial improvements in inventory turnover and reductions in stock levels.
    • This approach offers a cost-effective solution for optimizing pharmaceutical inventory in small to medium-sized hospitals.

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