2014 Inventory Management at JPHARM IE Nawal Odeh

2014 Inventory Management at JPHARM

IE. Nawal Odeh IE. Ola Odeh IE. Qasem Al Qasem 2 Team Members IE. Ruba Daraghmah

Outline 3 Introduction Methodology Results and analysis Conclusion

INTRODUCTION 4

Jerusalem Pharmaceutical Company (JPHARM) 5 Established in 1969, after a while has expanded across the Arab region Now has two more branches in Jordan and Algeria, with a total capital now of 6, 000 JD Listed in Palestine Stock Exchange as a public shareholding company

Problems 6 Insufficient purchasing quantities Lack of priorities of inventory items Excessive quantities in stores Delays in receiving orders due to political issues

Objectives 7 Cost and space reduction Improved delivery and sales performanc e Identifyin g gaps in inventory system Greater levels of Stock Turnover Lower levels of Inventor y Stock optimizatio n

METHODOLOGY 8

9

ABC, VED & Combination 10

Economic Order Quantity with Leveled Demand 11 Economic Order Quantity Is the quantity that minimizes the total cost of ordering and carrying inventory Ordering cost Carrying cost Silver, Edward, Pyke, David and Peterson, Rein. Inventory Management and Production Planning and Scheduling. s. l. : JOHN WILEY & SONS, 1998.

Policies 12 Continuou s Review Periodi c Review A item (s , S) Continuo us Review B item (s , Q) A item (R , s , S) Periodi c Review B item (R , S)

Safety Stock (Based on Service Level) 13 Often called the cycle service level. (P 1) probability of no stock out per replenishment cycle

Start with identifying P 1 k: safety factor P 1: service level �� L: standard deviation of demand errors 15

RESULTS AND ANALYSIS 15

ABC & VED classification 16 NIS Usage : Unit cost * Annual demand % NIS usage = NIS usage for each item / Total NIS usage Sorting %NIS usage for ABC OR lead Time for VED in descending order Find Cumulative % List ABC and VED items

ABC Analysis 17 Category A Total annual consumption % 70 Total B C 20 10 100 Value of annual consumption 820179. 3 247044. 2 116474. 7 1183698 No. of items 11 11 36 58 % of items 26. 54 16. 24 57. 22 100 ABC Classification Cumulative % NIS Usage NIS usage analysis 120 100 C 80 B 60 A 40 ABC Classification 20 0 0 100 Cumulative % of items 200

ABC Items 18 A items B items Item # R. M name 44 BOX FLU, 20 TABLETS 23 Phenylephrine Hydrochloride 16 Ibuprofen Powder 1 Acdisol (Crosscarmellose) 54 Bottle PET 125 m. L Brown, 28 mm 27 Sorbitol Liquid 70% 42 BOX TRUFEN 75 ML SUSPENTION 50 LEAFLET A/E TRUFEN 45 43 BOX TRUFEN 400 MG, 20 TABLETS Cartoon Brown 34 X 28 X 14 FOR SYRUP 55 Measusring Cup, 15 m. L Graduate 17 Ibuprofen Micronized Powder 53 Cap Alum 28 mm Printed , Glass Bottles 15 Glycerin 57 PVC 250 mm/250 Mic Clear 6 Caffiene. Anhydrouse 58 ALUMINUM FOIL 250 mm/25 mic Silver 22 Paracetamol Powder 3 Avicel PH 102 (Microcrystaline Cellulose) Sugar Crystal 52 LABEL TRUFEN, 75 m. L SUSPENTSION 20 Flavour Orange Powder 74388 29

C items Item R. M name # 19 34 Witepsol H 15 10 Dextromethorphan Hydrobromide 40 BOX STAND FLU, 36 BOX 19 Methocel E-5 56 2 Shells SUPPOSITORIES, DICLOFEN 75 mg AEROSIL 200 POWDER 21 Paracetamol DC 96% 4 46 Avicel RC 591 (Microcrystaline Cellulose) Cartoon Brown 26/27/29 TABLETS 41 BOX OTAMOL 500 MG, 20 TABLETS 39 BOX DICLOFEN 75 MG, 10 SUPPOSITORIES 51 LEAFLET A/E FLU 36 P. V. P. K-25 47 Cartoon Brown 425/33/27(9*60) 35 Xanthan Gum Powder Item # C items R. M name 28 30 18 Starch Maize Talc MAGNES. STEARATE POWDER 31 49 Titanium Dioxide LEAFLET A/E OTAMOL TABLETS 11 DICLOFENAC SOD. FINE POWD 48 7 LEAFLET A/E DICLOFEN Carboxymethylcellulose Sodium 25 32 26 24 Simethicone Emulsion 30% TITRIPLEX III E. D. T. A Sodium Benzoate POLYETHYLENE GLYCOL 400 33 9 14 37 13 12 Tween 80 Citric Acid Anhdrouse Food Colour Sunset Yellow YELLOW TARTRAZINE Food Colour Ponceu Red ETHYL ALCOHOL 95%ENTE 5 38 B. H. T. WATER PURIFIED

VED Analysis 20 % of items Category Total V E D 10 40 50 100 Value of annual consumption No. of items 324798. 7 444599. 6 414299. 8 1183698 10 26 22 58 Total annual consumption % 27. 44 37. 56 35 100 VED Classification Cumulative % NIS Usage NIS usage analysis 120 100 80 60 40 20 0 D E VED Classification V 0 50 100 Cumulative % of items 150

VED Items 21 V items Item # R. M name 34 Witepsol H 15 56 Shells SUPPOSITORIES, DICLOFEN 75 mg 1 Acdisol (Crosscarmellose) 3 Avicel PH 102 (Microcrystaline Cellulose) 4 Avicel RC 591 (Microcrystaline Cellulose) 11 DICLOFENAC SOD. FINE POWD. 16 Ibuprofen Powder 17 Ibuprofen Micronized Powder 18 MAGNES. STEARATE POWDER 19 Methocel E-5 Item # 26 31 32 33 37 45 46 47 48 49 50 51 52 2 27 28 29 30 38 53 54 D items R. M name Sodium Benzoate Titanium Dioxide TITRIPLEX III E. D. T. A Tween 80 YELLOW TARTRAZINE Cartoon Brown 34 X 28 X 14 FOR SYRUP Cartoon Brown 26/27/29 TABLETS Cartoon Brown 425/33/27(9*60) LEAFLET A/E DICLOFEN LEAFLET A/E OTAMOL TABLETS LEAFLET A/E TRUFEN. LEAFLET A/E FLU. LABEL TRUFEN, 75 m. L SUSPENTSION AEROSIL 200 POWDER. Sorbitol Liquid 70% Starch Maize Sugar Crystal Talc WATER PURIFIED Cap Alum 28 mm Printed , Glass Bottle PET 125 m. L Brown, 28 mm

E items Item R. M name # 22 21 22 35 36 58 8 10 15 20 23 39 40 41 42 Paracetamol DC 96% Paracetamol Powder Xanthan Gum Powder P. V. P. K-25 ALUMINUM FOIL 250 mm/25 mic Silver Chlorphenramine Maleate Dextromethorphan Hydrobromide Glycerin Flavour Orange Powder 74388 Phenylephrine Hydrochloride BOX DICLOFEN 75 MG, 10 SUPPOSITORIES. BOX STAND FLU, 36 BOX OTAMOL 500 MG, 20 TABLETS. BOX TRUFEN 75 ML SUSPENTION. Item # E items R. M name 43 BOX TRUFEN 400 MG, 20 TABLETS. 44 BOX FLU, 20 TABLETS. 57 5 6 7 9 12 PVC 250 mm/250 Mic Clear B. H. T. Caffiene. Anhydrouse Carboxymethylcellulose Sodium Citric Acid Anhdrouse ETHYL ALCOHOL 95%ENTE 13 Food Colour. Ponceu Red 14 Food Colour Sunset Yellow 24 POLYETHYLENE GLYCOL 400 25 Simethicone Emulsion 30%

ABC & VED Combination Analysis 23 % of items Category Total Class III 30 30 40 100 Value of annual consumption No. of items 339865. 9 467726. 9 376105. 4 1183698 13 20 25 58 Total annual consumption % 63. 1 15. 47 21. 51 100 Cumulative % of NIS Usage NIS usage analysis Combination 120 100 80 60 40 20 0 class III class I 0 50 100 150 Cumulative % of items Combination

Combination Items 24 Item # Class 1 items R. M name 1 Acdisol (Crosscarmellose) 3 Avicel PH 102 (Microcrystaline Cellulose) 16 Ibuprofen Powder 23 Phenylephrine Hydrochloride 29 Sugar Crystal 42 BOX TRUFEN 75 ML SUSPENTION. 43 BOX TRUFEN 400 MG, 20 TABLETS. 44 BOX FLU, 20 TABLETS. 53 Cap Alum 28 mm Printed , Glass Bottles 54 Bottle PET 125 m. L Brown, 28 mm 55 Measusring Cup, 15 m. L Graduate Item # class 2 items R. M name 2 4 6 10 15 17 19 20 21 22 27 34 39 AEROSIL 200 POWDER. Avicel RC 591 (Microcrystaline Cellulose) Caffiene. Anhydrouse Dextromethorphan Hydrobromide Glycerin Ibuprofen Micronized Powder Methocel E-5 Flavour Orange Powder 74388 Paracetamol DC 96% Paracetamol Powder Sorbitol Liquid 70% Witepsol H 15 BOX DICLOFEN 75 MG, 10 SUPPOSITORIES. 40 41 45 46 50 52 BOX STAND FLU, 36 BOX OTAMOL 500 MG, 20 TABLETS. Cartoon Brown 34 X 28 X 14 FOR SYRUP Cartoon Brown 26/27/29 TABLETS LEAFLET A/E TRUFEN. LABEL TRUFEN, 75 m. L SUSPENTSION

class 3 items Item R. M name # 25 5 7 8 9 B. H. T. Carboxymethylcellulose Sodium Chlorphenramine Maleate Citric Acid Anhdrouse 11 DICLOFENAC SOD. FINE POWD. ETHYL ALCOHOL 95%ENTE Food Colour. Ponceu Red Food Colour Sunset Yellow MAGNES. STEARATE POWDER POLYETHYLENE GLYCOL 400 12 13 14 18 24 25 26 28 30 31 Simethicone Emulsion 30% Sodium Benzoate Starch Maize Talc Titanium Dioxide class 3 items Item R. M name # 32 33 TITRIPLEX III E. D. T. A Tween 80 35 36 Xanthan Gum Powder P. V. P. K-25 37 YELLOW TARTRAZINE 38 WATER PURIFIED Cartoon Brown 425/33/27(9*60) 47 48 49 51 32 33 LEAFLET A/E DICLOFEN LEAFLET A/E OTAMOL TABLETS LEAFLET A/E FLU. TITRIPLEX III E. D. T. A 35 36 37 38 47 Tween 80 Xanthan Gum Powder P. V. P. K-25 YELLOW TARTRAZINE WATER PURIFIED Cartoon Brown 425/33/27(9*60) 48 LEAFLET A/E DICLOFEN

Inventory Controls Decisions 26 EOQ Safety Stock ROP Time Between Order • Demand*lead time + SS • EOQ/ Demand

Class I 27 Item # 1 3 16 23. . EOQ 191. 89 818. 04 909. 74 14. 79. . Safety Stock 114. 64 81. 06. . Item # 1 3 16 23. . ROP 162. 01 351. 56 730. 02 82. 99. . TBO(month) 9. 35 7. 97 3. 41 8. 88. .

Class II 28 Item # 2 4 6 10. . EOQ 64. 85 98. 11 25. 47 10. 67. . Safety Stock 8. 05 114. 64 57. 32 81. 06. . Item # 2 4 6 10. . ROP 8. 05 127. 26 60. 20 82. 02. . TBO(month) 8. 06 17. 94 5. 09 12. 80. .

Class III 29 Item # EOQ Item # ROP 5 0. 0680 5 57. 32 7 49. 95 7 58. 22 8 13. 46 8 81. 45 9 103. 41 9 58. 45 . . . . Item # Safety Stock Item # TBO(month) 5 12. 00 5 7 8 9 57. 32 81. 06 57. 32 7 31. 97 8 40. 58 9 52. 94 . . . .

CONCLUSION 30

Holding Cost Reduction 31 122000 NIS 480000 NIS 360000 NIS

Lower levels of Inventory 32 Cap Alum 28 mm Measuring Cup, 15 ml Graduate Bottle PET 125 m. L Brown Sugar Crystal AEROSIL 200 POWDER Starch Maize Zero Safety Stock! Talc and WATER PURIFIED

Your Vision, Our Passion! 33 Stock. Sol

Main Menu 34

Input Button 35 Excel Sheet

Demand Forecasting Button 36 Foreca st Simple Moving Average Last Data Point Exponential Smoothing Graph

Economic Order Quantity Button 37

ABC Analysis Button 38

VED Analysis Button 39

ABC & VED Combination Button 40

SS & ROP for I/A Button 41 Manageme nt

SS & ROP for II/B Button 42

SS & ROP for III/C Button 43

THANKS FOR YOUR ATTENTION 44