Dootrooper

Studying Chemistry with a twist of Pharmacy looking to specialize in nootropics

[dootrooper]

Biphasic ABC analysis & XYZ analysis

Often, a simple ABC analysis is not enough. Then you can refine the grouping with subgroups, e.g. Aa, Ab, Ac or A1, A2, etc. If you want to examine the profitability of the products, you also need cost information, and in this case you can for example combine the ABC analysis with an XYZ analysis looking at logistics costs or a similar analysis.

So titles can be categorized using more than one criterion using ABC analysis. For instance, combining sales volume and sales margin (my-coverage = sales revenue - variable costs) in order to learn about the importance of the items for the business is an example of practical classification. After all, a product that sells well and moves quickly could have a low price or a thin profit margin, in which case it would be less significant than a product with a lower volume but a higher price and a wider profit margin.

For the two-stage ABC analysis, the categorization criteria can be, for instance, sales volume and sales margin. In this instance, the titles are categorized in accordance with the sales volume and the sales margin, and a classification in accordance with the following two criteria is obtained:

Aa, Ab, Ac, Ad Ba, Bb, Bc, Bd Ca, Cb, Cc, Cd Da, Db, Dc, Dd

The objects can be arranged in a grid to show classification. The reciprocal relationships of the items in the same category are also visible when the items are arranged in the grid, taking into consideration their mutual location both horizontally and vertically. The significance of several categories to the firm can also be demonstrated through color codes.

For instance, XYZ analysis examines the logistical costs of various goods. ABC (Activity Based Costing) calculations can be used to calculate the costs associated with product order-delivery, storage, and handling (such as inspection, unpacking, repacking, etc.). The basic idea is the same as in the ABC analysis, namely that group X products account for 50% of the logistical costs associated with all inventory items, etc. You can also examine the quantity of cost-producing events in the XYZ analysis, such as the quantity of sales and receiving events or the processing time needed. Further cost details are not required in this instance.

A comparable grid is produced when ABC analysis is merged with it, just like in the two-step ABC analysis. Similar to the two-step ABC analysis, the components are arranged on the horizontal axis, but the vertical axis now displays logistical costs. The logistical costs of an item increase with its position on the grid. Items that account for 50% of the logistical costs are in the X group.

[dootrooper]

Facets in ABC analysis

Based on inventory accounting, a number of inventory systems perform ABC analysis. If there aren't many items, the analysis can also be done manually if all the required data is present.

The basis for analysis (grouping) is chosen (e.g. my-volume, my-revenue, margin…). Let's arrange the products based on the chosen criteria in decreasing order of magnitude. Calculation of the total sum using the chosen criterion (e.g. total volume, total sales, total margin…). In order to choose as many products in group A so that the sum of their specified criteria is as close to 50% of the total amount as possible, we compute how much is 50% of the total amount.

Then, choose the following items from groups A to B so that their sums are as near to 30% of the total as possible. Let's compute how much is 30% of the overall amount. Determine the amount that makes up 18% of the total and create group C. Forming group D from them and the things that weren't entirely sold during the review period, let's figure out how much is 2% of the overall amount.

[dootrooper]

ABC analysis

The likelihood of an uncontrollable increase in the inventory's total value increases with the number of inventory items (also known as stock keeping units, or SKUs) in the warehouse. Not only should the overall inventory be considered in inventory management, but also individual inventory items, or at the very least product group-specific inventory management. To help control item balances and circulation, products can be categorized using the so-called ABC analysis.

Due to the thousands of goods that are typically kept in warehouses and the impact that their successful management has on cost effectiveness, inventory control must be able to be performed as simply and effectively as feasible. It is worthwhile separating the objects according to their value and using resources for distinct items as control resources are typically limited.

In the ABC analysis, the products that need to be stored are categorized based on necessity, such as by sales volume, product turnover, sales margin, or client count. The capital invested in the warehouse can be released with the use of ABC analysis, and product availability can also be increased. The 80/20 rule states that category A includes items that account for the initial 80% of sales volume and represent 20% of all items.

However, categorization does not always follow the 80/20 rule, and usually speaking, the ABC classification starts with the following division:

Group A: the initial 50% of all sales Next 30% of total revenues for Group B Group C: the following 18% of all sales Group D: the final 2% of all sales The classification can be broken down into a number of groups, and the proportions of each group's sales can change as necessary.

Different groups may use different stock replenishment techniques. Continuous monitoring and the order point approach should be used, at the very least for A products. If the warehouse makes use of an ERP system, the balance of every item is known in real time, making warehouse control simple. It is advised to use period monitoring, a variable order interval and lot size approach for less significant products in the absence of a control system, or an even order interval and lot size method for products with a consistent flow.

Products in Group D might have sales that are so pitiful that it would be wise to omit them from the list. Some D products, however, might be significant to the buyer, in which case maintaining them in the selection would be appropriate. These could include crucial spare parts that are only seldom required.

[dootrooper]

Contexts for Pharmacy Technicians

Supply/Inventory balance =

You can determine how many products you still have on hand by checking the product's inventory balance. For each product in your store, you can specify your own stock balance.

The inventory balance for a product is immediately updated when clients place orders through your website. If you specify that you have 15 pieces of a product in stock and it is ordered three times, for instance, there are still 12 pieces of the product in stock after the orders.

The stock balance displays how many products are still available as well as how many are currently in stock in your store. For instance, if the inventory balance for a product is zero, it is out of stock.

2. Product flaw =

When the product does not conform to the agreed-upon kind, quantity, quality, durability, and other features, as well as the general specifications established for the product, there is a flaw in the product. However, if the buyer has been expressly told of the deviation and has separately and explicitly accepted it, the general requirements may be varied from.

A flaw in the product exists if:

a. If the seller was aware of this, the items are not appropriate for either their planned special use by the customer or their regular purpose of use. b. The products do not match the seller's description, sample, or model. c. The products' toughness falls short of expectations.

3. Inventory turnover =

Inventory turnover time is the number of times the inventory changes throughout the course of the year. In this example, it refers to how many 40-carton sets were used in a calendar year.

Calculating stock turnover is done as follows:

Stock turnover is calculated as follows: 100 pieces divided by 40 pieces, or 2.5, represents the annual stock consumption. In other words, throughout the course of the year, you've sold an average of 2.5 times the promised amount of your inventory.

4. Days in stock =

Days in stock refers to the number of days your inventory lasts compared to your usage.

The amount of stock is determined in the manner described below: Inventory excess is calculated as follows: 40 items/100 items divided by the average inventory balance multiplied by 365 days equals 146 days. As a result, you have had coffee shipments waiting to be sold for an average of 146 days.

Stock volume and turnover are related in the following ways: Stock quantity is equal to 365 divided by the time it takes for a warehouse to turn through its contents, or vice versa.

5. Inventory value =

All items that are classified as inventory by the company's accounting are included in the inventory value. Items meant to be given away, consumed as is, or processed are considered current assets, according to Chapter 4 of the Finnish Accounting Act 1336/1997.

If they are included in the company's inventory, foreign purchases of goods and legally binding procurement contracts are also included in inventories. The business for whose benefit the commission work is carried out declares inventories created in connection with the commission activity.

6. Loss =

Loss is the discrepancy between the quantity of items delivered and the quantity recorded in the accounting. For instance, math errors, spoilage, or adjustments could be to blame for the discrepancy. If a certain raw material is not used or cannot be recovered, waste will also result. The topic of food waste receives the most attention in daily life. All food or raw materials that are thrown away but could have been consumed before spoiling are referred to as food waste. Resource efficiency is the use of resources as effectively as possible.

7. Inventory =

A list of products and commodities is called an inventory, and it is used to determine what is owned and what might have been lost. Law requires that inventories be taken once a year in business, but they are also made for financial accounts and wills.

In terms of financial statements, stock inventory refers to a balance sheet breakdown of the inventory created by the person in charge of accounting.

Theft of items is the main cause of losses in grocery stores, although other factors, such compilation errors, can also cause balances to be thrown. All items in the inventory are meticulously counted, which frequently requires a lot of time and labor hours. Inventory is the only way to determine the future of some products.

8. Target balance =

The sum of money deposited into the account at the time the securitization documents were issued.

9. VNR number =

A unique article of medicine having marketing authorization in the Nordic nations is identified by its Nordic Article Number (Vnr). Each and every human medicine, veterinary medicine, herbal medicinal product, and traditional herbal medicinal product is assigned a six-digit code called the Vnr (000001-199999 and 370000-599999). It makes it possible for packages to be easily verified at all points in the drug supply chain, from the prescription to the patient.

For radiopharmaceuticals, compassionate use goods, and sample medications, Vnrs are not required. All herbal medications are exempt from the Vnr requirement in Denmark.

If certain requirements are satisfied (see Criteria for Vnr), a Vnr may cover one, many, or even all of the Nordic countries.

It is crucial that producers who work on products for the market understand how significant the Vnr is. It serves as a communication link between various IT systems that are engaged in the prescription, dispensing, ordering, supply, storage, and information on drugs. Therefore, the proper use of the Vnr is crucial for both effective item management and patient safety. Additionally, electronic prescriptions and highly automated management systems throughout the entire supply chain increase the possibility of disastrous outcomes in the event that a Vnr is combined with another Vnr or is inaccurate in some other way. As a result, these rules for managing Vnrs must be properly followed by all Vnr adjustments.

The labeling of primary and transit packages is not covered by the guidelines for Nordic article numbering.

10. FIFO principle (LEAN philosophy) =

The first product brought into the warehouse is always sold first, according to the FIFO principle, which states that things depart the warehouse in the same order as they are registered there.

The product lines, stock balances, and consignment stock on verified sales or purchase agreements cannot be modified after confirmation due to the FIFO principle. If the aforementioned information needs to be changed later, you must either produce a new document or a refund invoice for the sales document.

NOTE: For product returns, the most recent purchase price is utilized.