Techniques of inventory control .Pharmacy practice B.Pharm 7th Sem

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Techniques of inventory control .Pharmacy practice B.Pharm 7th Sem
handwritten notes of unit 5th
In this article, we’ll look at 21 common inventory control techniques that will show you how to control your inventory (stock) levels, help you optimize stock, and maximize profits.

Different types of inventory control techniques are applied by business leaders based on business type, size, location, and demands.
. Demand Forecasting.
Demand forecasting has become a familiar inventory control technique for retailers and manufacturers. Demand forecasting estimates future demand based on historical sales data where the company expects customers will purchase according to estimate.

Remember, no predictions will be 100% perfect. But good predictions maximize potentials with minimal abilities.

The key to controlling your stock levels is predictive analytics from historical data. It’s critical to select and implement advanced inventory forecasting models that produce accurate demand forecasts. For small and medium-sized retailers and manufacturers, most of the time, there is no need to consider complex demand forecasting issues. It’s enough to follow historical sales patterns with some other factors like seasonality and trends.

Seasonality: Season is an essential factor in which demands may vary from season to season. It’s best practice to forecast the market based on previous seasons, as this makes the data more accurate for forecasting going forward.

Trends: Product demand is influenced by occasions, festivals, shifts in societal attitudes or values, technology, social, economic, and legal factors. Follow up on the trends and upcoming possibilities and adjust your forecasts accordingly.

Simple Implementation: For a defined period, analyze historical data and calculate safety stock and reorder point. Safety stock is the minimum stock quantity needed to avoid stock-outs based on demand. Reorder point is calculated from safety stock and lead time to ensure that the minimum stock quantity (safety stock) is maintained at any given moment. Reorder point is reached when a product’s stock quantity touches the reorder point, signaling the need to order more to ensure safety stock at all times.

Two Key Points of Demand Forecasting When Used as an Inventory Control Technique:

Demand-driven replenishment (DDR) uses demand data to determine the right amount of inventory to order. This data can be collected from a variety of sources, such as sales data, customer surveys, and market research. DDR can help businesses to avoid overstocking and understocking, and it can also help them to improve their inventory accuracy.
Continuous replenishment (CR) orders inventory on a continuous basis, rather than in batches. This can help businesses to reduce their inventory costs by avoiding the need to store large amounts of inventory. CR can also help businesses to improve their inventory accuracy by ensuring that they always have the right amount of inventory on hand.
2. ABC Analysis.
ABC analysis is an inventory control technique that categorizes inventory items based on their importance and profits. ABC inventory categorization follows the 80-20 rule where 80% (almost) of revenues come from 20% (almost) of items. This 20% of items are categorized as ‘A’ category. The next 30% of items are classified as ‘B’. And the bottom 50% of items are classified as ‘C’. This categorization helps business leaders understand which products or items are most important to the financial success of their business.