ABC ANALYSIS

1. Under the guidance of
Mr.G.RAMESH
DEPARTMENT OF PHARMACY
PRACTICE
ABC ANALYSIS
Presented By
KAMMA SRI PANDU MUKHARJEE
15AB1T0010
VIGNAN PHARMACY COLLEGE
(Approved by AICTE & PCI Affiliated to JNTU KAKINADA)
VADLAMUDI, GUNTUR DIST, ANDHRA PRADESH, INDIA, PIN: 522 213

2. INTRODUCTION
• ABC method of inventory control is also called as
“Always Better Control” method.
• ABC analysis is a well-established categorization
technique based on the Pareto Principle for
determining which items should get priority in the
management of a company’s inventory.
• ABC classification that is powerful tool to prioritize &
classify items according to inventory value can be
considered

3. • Inventories are categorized into three classes - A, B,
and C.
• Most management efforts and oversights are expended
on managing A items. C items get the least attention
and B items are in-between.
Performing an ABC analysis:
• Listing all medical applies in the inventory.
• Entering annual consumption of each medicine.
• Calculating percentage of total annual sales
contributing by each drug.
• Sorting the list by value of each item.

4. ABC ANALYSIS CATEGORIES:
In ABC analysis the items are categorised in three main
categories on the basis of their usage value.
More costly and valuable items are classified as A:
 These are large investment items but not much in
number that is vital few say 10% of the items account
for 75% of total capital invested in inventory.
 These items need more closer and careful control.
 These items have high inventory cost and frequent
order of small size for these items can result in
enormous savings.

5. Average usage value items are classified as B :
 About 15% of the items in an inventory account for
15% of the total investment.
 Those items are less important than A class items bt
have costly enough to have more attention on their use.
 These items cannot be overlooked but need lesser
degree of control than those in class A.
 Statistical sampling is generally applied to their control.

6. Low usage vale items are kept in class c:
 About 75% of the inventory items account for only
10% of the invested capital.
 These items can be stored at an operative place where
people can help themselves without any requisition
formality.
 Loose control of ‘C’ items will increase their
investment cost and expenditure on shelfwear,
obsolescence and wasteful use.

7.  Item with % cumulative cost between > 70%
categorised as ‘A’ items
 Item with % cumulative cost between 10-70%
categorised as ‘B’ items
 Item with % cumulative cost < 10% categorised as ‘C’
items

8. APPLICATIONS OF ABC ANALYSIS:
• ABC analysis can be effectively used in material
management
• The various stages where it can be applied are
• To evolve useful reordering strategy
• Stock records
• Priority treatment to different items
• Determination of safety stock limits
• Store layout
• Value analysis

9. PERFORM ABC ANALYSIS FOR THE
FOLLOWING:
S.No Name of the drug Dosage form Unit cost Total units
1. Ferrous salt Tablet 0.1 32000
2. Furosemide Tablet 0.4 100000
3. Gentamycin Ampule 6.1 120800
4. Glibenclamide Tablet 0.3 80000
5. Hydrocortisone Vial 15.1 1800
6. Trachy B vaccine Vial 110 1000
7. Hyoscine-n-butyl
bromide
Tablet 0.8 18000
8. Insulin injection Vial 120 8100
9. Lidocaine Ampoule 11.8 2150
10. Metronidazole Tablet 0.3 200000

10. ABC ANALYSIS:
NAME OF THE DRUG ASCENDING
ORDER
CUMMULATI
VE COST
% TOTAL
COST
%CUMMULA
TIVE COST
Ferrous salt 3200 3200 0.15 0.15
Hyoscine-n-butyl
bromide
14400 17600 0.71 0.87
Glibenclamide 24000 41600 1.19 2.06
Lidocaine 25370 66970 1.26 3.32
Hydrocortisone 27180 94150 1.35 4.67
Furosemide 40000 134150 1.98 6.66
Metronidazole 60000 194150 2.98 9.6
Trachy B vaccine 110000 304150 5.46 15.1
Gentamycin 736880 1041030 36.6 51.7
Insulin injection 972000 2013030 48.2 100

11. CATEGORY PERCENTAGE %
A 10
B 20
C 70
10%
20%
70%
ABC ANALYSIS
A B c

12. CONCLUSION:
 Percentage of category A items-1(10%)
 Percentage of category B items-2(20%)
 Percentage of category C items-7(70%)