1.

Conduct an ABC analysis from the data obtained from a

tertiary care hospital

Sl.No Item Code Units Cost/unit (Rs)

1. AAB 8 200
2. AAC 4 3000
3. AAD 20 200
4. AAE 1000 0.10
5. AAF 100 3
6. AAG 8 1000
7. AAH 11 100
8. AAI 7 10000
9. AAJ 1 1000
10. AAK 19 100
2.From the following information obtained from a District
Hospital , Conduct an ABC analysis

Sl.No Item description Units Cost per unit

(Rs)
1 X-ray film 38 packets 200
2 Hudson oxygen mask 2 No 2000
3 Pulse oxymeter 12 20000
4 ECG roll 22 rolls 200
5 Sample detecter 16 No 2000
6 Paracetamol 100 strips 6
7 Folic acid tablet 2000 strips 4
8 Acetate Fluid 20 litres 400
9 Finger clips 8 No 6000
10 ECG jelly 250 16 bottles 400
3.Conduct an ABC analysis ,HML analysis and VED analysis for the
following items from a CHC

Sl. Product Product name Measurement Units Cost per

No code unit consumed unit
1 1509 Atenolol Tablets 50 mg Box of 100 96 172
2 1609 Bisacodyl Tablets 5mg number 71 8
3 1611 Ibuprofen Tablets 400mg Strips 100 42
4 1612 Single Channel Pipettes Number 2 867
5 1613 Dressing Trolley Number 2 3500
6 1614 N-95 Mask number 50 33
7 1615 Needla Destroyer Number 2 1300
8 1616 Microslide with ISI Mark Number 50 27
9 1617 Diclofenac sodium 50 mg strip 100 91
10 1618 Norfloxacin tab 400 mg Box of 1000 6 971
11 1619 Omeprazole 20 mg Box of 100 21 27
12 1623 Flucanazole tab 50 mg Box of 100 16 43
13 1624 Procto clyss Packets 33 29
14 1625 Ofloxacin Inj Bottle of 100 ml 16 9
15 1626 Propofol inj 1% Box of 20 vial 8 39
16 1627 Universal Container with Number 740 4
Cap
17 1628 Saline Stand (SS) Number 4 925
18 1629 Pulse Oximeter Number 1 12750
19 1631 Surgical hernia mesh Number 3 693
15x15cm
20 1633 Ryles tube size 10 Packet 11 9
21 1634 Disposable spinal needle Box of 50 No 3 1087
(25G)
22 1635 Foleys catheter for adults Unit of one 6 37
 Economic Order Quanity ( EOQ )

1. Consider an item with with an annual demand of 1000 units . Unit

price of the item is Re.1/-. Carrying cost is estimated at 30% . ordering
cost is Rs.600 per order . Calculate the EOQ using trial and error
method , assuming the quanities orderd (q) as 100, 200, 250, 500,
1000, 2000, and 5000.

2. Annual demand for a consumbable in a hospital is 10,000 units .

Ordering cost is Rs.36 per order . Cost per unit is Rs.2/-. Inventory
carrying charges are estimated at 9%. Determine EOQ using trial and
error method assuming the quantity to be placed ( 200, 250, 500,1000,
2000, 2500, 5000, 10,000 and 20,000). identidy the optimum number
of orders .

3. A supplier has to supply to chain of laboratories 600 units of a

reagent . Inventorycarrying cost is 60% and ordering cost per order is
Rs. 80. Find the EOQ ?. Total cost associated with inventories and the
optimum number of orders ?

4.A hospital for one of its A class items placed 5 orders , each of size
200 in a year. Ordering cost is Rs. 600 per order . Holding cost is 40% .
Cost per unit is Rs. 40/- . Find out the loss to the hospital in not
operating scientific inventory policy . Give recommendations ?

5.
Estimated usage per annum is 24000 units & price per unit charged
by the supplier is Rs. 6, ordering cost per order is Rs. 50, carrying
cost of stock as % of average stock value is 10%
Bases on the above information, economic order quantity can be
determined by preparing a schedule as under:
No. of orders per 1 2 4 6 8 10 12 16 20
Annum
Order Size 24000 12000 6000 4000 3000 2400 2000 1500 1200
(Total requirement)
(No. of orders)
Average Stock 12000 6000 3000 2000 1500 1200 1000 750 600
(Order size/2)
Avg. Stock Value 72000 36000 18000 12000 9000 7200 6000 4500 3600
(Avg. stock*unit cost)
Stock carrying 7200 3600 1800 1200 900 720 600 450 360
Costs (10% of average
stock value)
Ordering costs 50 100 200 300 400 500 600 800 1000
(No. of orders*order
Cost per order)
Total cost per annum 7250 3700 2000 1500 1300 1220 1200 1250 1360
(Carrying cost+
Ordering cost)
It can be seen from the above table that, with the increase in quantity ordered, stock carrying costs
also increases & with the decrease in quantity ordered, the stock carrying costs decreases; while with
the increase in quantity ordered, ordering cost decreases & with the decrease in quantity ordered,
ordering cost increases. Thus when the ordered quantity is 2000 units, the total costs are the lowest at
$ 1200. Thus economic order quantity is 2000 units.
Costs of materials are not included in the total cost. Where the price per unit is fixed, this is not
required. Where, for higher quantity, discount is available progressively, cost of materials at each level
has to be considered.
 EOQ can be determined on the basis of graphical form & also by applying mathematical
formula. But, EOQ determination in graphical or tabular form is lengthy & also accurate solution may
not be provided. It is possible to find out EOQ mathematically by applying the following formula:

Example:

Particulars relating to an inventory are as below:

Annual consumption -6000 units (in 360 days)
Cost per unit - $ 1
Ordering cost - $ 6 per order
Inventory carrying charge – 50%
Normal lead time = 30 days
Safety stock – 60 days consumption
Find out-(a) each time, how much should be ordered, (b) when the order should be placed, (c) what
should be the ideal inventory level immediately before the delivery of material ordered is received, (d)
each many times orders for EOQ should be placed in a year.
Solution:
1. EOQ = √ (2CoO)/Cc
Where Co = 6000 units, O = $ 6 per order, Cc = 50% of $1 = $ 0.50
EOQ = √ (2*6000*6)/0.40
= 1200 units.
Hence each time 1200 units should be ordered.
2. Re-ordering level= Safety stock+ Lead time consumption
= (60+30) or 90 day’s consumption
= 90*(6000/360) = 1500 units
Hence, an order should be placed when the stock reaches 1500 units
3. The ideal inventory level, immediately before the delivery of material ordered is received is the
safety stock level, which represents 60 days consumption i.e.
60*(6000/360) = 1000 units.

4.No of times orders for EOQ to be placed in a year = 6000/1200 = 5 times

Calculate (a) Re-ordering level, (b) Maximum level, (c) Minimum
level & (d) Danger level, from the given below details:
Re-ordering quantity is to be calculated on the basis of the following information:
Cost of placing a purchase order is $ 40
No of units purchased during the year are 10000 units
Purchase price per unit inclusive of transportation cost is $ 100
Annual cost of storage is $ 5
Details of lead time: Average 20 days, Maximum 30 days, Minimum 12 days. For emergency purchases
8 days.
Rate of consumption: Average 30 units per day, maximum 40 units per day.
Solution:
(a) Re-order level = Maximum usage per period * Maximum delivery period
= 40 units per day * 30 days = 1200 units
(b) Maximum level = Re-order level + Re-order quantity-(Minimum Usage*Minimum delivery period)
[Working notes 1 & 2]
=1200 units+ 400 units- (20 units per day*12days)
= 1360 units
(c) Minimum level = Re-order level-(Average usage*Average delivery period)
= 1200 units – (30 units*20days)
= 600 units
(d) Danger level = Average usage*Lead time for emergency purchase
=30 units* 8 days
=240 units
Working Notes: (1) Re-ordering quantity = EOQ = √ (2CoO)/Cc
= √ (2*10000*40)/5 = 400 units
(2) Minimum Usage: - Average usage is 30 units per day. Total of minimum & maximum usage is (30
units *2) or 60 units per day. Since maximum usage is 40 units per day, minimum usage is (60-40)
units or 20 units per day.
Prepare a stores ledger account assuming that a base stock of 600 units
@ $ 5 per unit is maintained & FIFO method is applied on the basis
of the following records of the receipts & issues of materials in March
2011.
March 01 Purchased 4000 units @ $ 5
08 Issued 1200 units
12 Purchased 2000 units @ $ 6
15 Issued 2400 units
19 Issued 600 units
25 Purchased 2400 units @ $ 5.50
27 Issued 2600 units
30 Purchased 1400 units @ $ 6.50