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PREFACE
ummer internship is an integral part for Master of Business Administration. It is imparted with a view that the students get practical knowledge on the subject; enrich their self improvement and development.
It was an immense pleasure of getting an opportunity to undergo internship for 10 weeks at Sikkim Manipal University. The main objective of my internship programme was to profit analysis and how to manage the inventory of CRH pharmacy.
This internship programme have give me the feeling of corporate environment, the way to perform assigned jobs and how to set target and achieve them. This sort of practical knowledge gives me the opportunity to see the application of the basic management principle of the real organization situation.
The project report is divided into different chapters so as to have a good knowledge on the study and tried my best to arrange and write the project reporting in a systematic ways so that it may prove to beneficial for organization and other upcoming researchers
ACKNOWLEDGEMENT
n the completion of this project I would like to thanks everyone has been very influential and helpful during the project duration. It is a matter of great pride for me to undergo summer internship programme in Sikkim Manipal University. It has been a privilege for me to have done my internship in one of the best university of India.
I would like to extend my sincere gratitude to Mr. Ajaya Jha, lecturer and Head of the Department (management) and Dr Bedenta Bora proffesor for the necessary step and providing their valuable suggestions needed for the project work. My sincere thank goes to incharge of CRH pharmacyfor their guidance and moral support.
It is my pleasure to express my humble gratitude to Mr. Soumya kant mishra HR head of Sikkim Manipal University for providing me every possible support to complete my project work.
I would also like to thanks all the staff members of CRH Pharmacy, for their immense understanding, guidance and co operation.
Table of Content
EXECUTIVE SUMMARY
Submitted To: Submitted By: Topic of The Study: Sikkim Manipal University of Technology Raju Kanwar Profit analysis and Inventory Management on Pharmacy
10 week
Objective of the study: To analyse the profit margin and how to manage inventory of C.R.H Pharmacy, Manipal by focusing on interactions among the following elements
CHAPTER 1 INTRODUCTION
The Manipal Group of Companies, Founded by Pai`s of Manipal, is a major Financial and Industrial group in South India. The Group has its activities spread over financial services, manufacturing, industry, healthcare and Education The group advocates the principle of collective efforts towards collective prosperity. Conscious of the rapid advances in engineering, medical education & technologies, the Group strives to practice the idea of pooling of manpower expertise and reinforce the accomplishment of exemplary learning outcome and professional practices. The high spot of academics on the education map,
Manipal is well known for its academic institutions. The group with its excellent performance is known for its contributions to enriching human resources and talent pool of this country. The founder of the Manipal Group, late Dr.T.M.A. Pai was an outstanding practitioner of his precept. Several institutions, commercial and non-profit, which he founded co- funded, are serving the public at large in an exemplary way.
It was established on 1997. The Central Referral Hospital (CRH), Tadong, is a 500 bedded tertiary care Hospital. It is a nine stored building with a floor space of more than 3,00,000 square feet. The hospital has 21 specialties, 8 operation theatres and all state of art equipment.CRH is an ISO 9001:2000 certified hospital by BSI Management System with state of art medical record Library, Medical auditing and computerized Hospital Information System. We function as per our carefully drafted policies and procedures with special emphasis to infection control practices
MISSIONs
VISION
To be a preferred choice of students, faculty and industry in every discipline undertake by the university
OBJECTIVES
To support, promote and undertake the advancement of academy education. To provide for research and for advancement of and dissemination of knowledge Through extension and community service. To undertake all such activities, which is necessary for the growth of the university
MEDICAL SUPERTENDENT
HR MANAGER
ACCOUNTANT
STORE MANAGER
QUALITY ASSURANCE
QUALITY CONTROL
PRODUCTION MANAGER
ENGINEER
ASSISTANT
TRAINEE
CRH PHARMACY
CRH Pharmacy is concerned with the quality control and dispensing of medicaments used to treat disease. The majority of modern medicaments consist of tablets, capsules, and injections, all produced under stringent conditions. It is a retail shop where medicines and other articles are sold. Pharmacy was evolved from the Greek word PHARMAKON which means drugs. Pharmacy is an, art of compounding and dispensing drugs and medication.
FLOW CHARTS
FLOW CHART FOR PHARMACEUTICALS/DRUGS
QUALITY CONTROL
ISSUE
PHARMACY
IN-PATIENT
OUT PATIENT
REGISTRATION
IN-PATIENT
INTENSIVE CONSUMPTION
OUT-PATIENT
CASH COUNTER
PHARMACY
INTRODUCTION OF INVENTORY
It can be used to refer to the stock on hand at a particular time of raw materials, goods-inprocess of manufacturing, merchandise purchased for resale and the like tangible assets which can be seen measured and counted. In connection with financial statement and accounting records, the reference may be to amount assigned to the stock of goods owned by enterprise at a particular time.
DEFINITIONS
REORDER LEVEL: This term is used to denote the stock level at which fresh order has to be placed. LEAD TIME: It is the average duration of the time in days between the placing of order and the receipt of the materials. SAFETY STOCK: It is the quantity of stores set apart as a safeguard against the variation in demand and procurement period. MAXIMUM STOCK: It is the maximum quantity of material which can be held in stock at any time Stock should not exceed this quantity so that their may be no overstocking
REORDER MODEL
R Q U A N T I T P Y
NIL STOCK
QP= WORKING STOCK RE= LEADTIME USAGE R= REORDER POINT E= ORDER RECEIVED LE= LEAD TIME L= ORDER PLACED
The output is the only factor affecting costs there may be others Including inflation, efficiency, economic and political factors.
22
The simplistic approach to cost relationships: that total costs are divided into fixed and variable costs in reality costs cannot be split easily, even Into variable and fixed costs.
3.
The likelihood that fixed costs do not remain constant beyond certain Ranges.
4. 4.
The behavior of both costs and revenue is a linear linearity is rare with Regard to costs and revenue.
5.
There is no uncertainty there is much uncertainty involved in the Prediction costs and sales.
6 6.
There is a single product- business usually provide more than one product and sales mix is not constant but continually changes due to changes in Demand.
7. 7. 8. 8.
That stock levels do not change. The time value of money is ignored.
9. 9. That these assumptions hold over the relevant range (the activity levels within which assumptions about cost behavior in break-even analysis Remain valid)
OBJECTIVE OF STUDY
1. To set the reorder level for all the medicine for both retail and bulk store. 2. To avoid losses from inventory obsolescence. 3. To reduce the financial investment in inventories. 4. To increase the sales of medicine of CRH pharmacy. 5. To avoid the bouncing back of prescription.
SCOPE
1. To help the management in providing information regarding which are the medicine are more profitable. 2. To provide the information which company drugs has the largest selling how much profit percentage it is giving. 3. To help pharmacy incharge in forcasting the demand and requirement of drugs and place the order. 4. To avoid over stocking and under stocking of drugs. 5. Continous availabity of all the drug in pharmacy store
ii)secondary source
Data provided by IT department. Data provided by finance department
Method used in collecting data: data as per the requirement in project has been
collected by the way of reference.
1. Prices of products
It is the sum of the total medicines sold in a particular year for that particular company.
FORMULA: =SUM (FIRST SALE: LAST SALE)
C.
AVERAGE SALES It is the division between total sales and the number of medicines for that particular company. FORMULA: = TOTAL SALES NO.OF MEDICINES
D. PROFIT MARGIN The sales price and the purchase price are taken into consideration in this case. Profit margin in Rs. is calculated as :
FORMULA: SELLING PRICE PURCHASE PRICE Profit margin in percent is calculated as : FORMULA: = Profit margin (in Rs) * 100 Purchase price of that medicine for that particular year.
below Rs.100 and the Average Profit Margin (in Rs and in percent) of these Medicines is respectively Rs 12.24 and 43.77%.
b) Purchase price between Rs.100 and Rs.200 There are around 146 Medicines in our pharmacy which is purchased between Rs.100 and Rs.200 and the Average Profit Margin (in Rs and in percent) of these Medicines is respectively Rs 78.31 and 53.50%.
c) Purchase price between Rs.200 and Rs.300 There are around 101 Medicines in our pharmacy which is purchased between Rs.200 and Rs.300 and the Average Profit Margin (in Rs and in percent) of these Medicines is respectively Rs 164.61 and 69.19%.
d) Purchase price between Rs.300 and Rs.400 There are around 43 Medicines in our pharmacy which is purchased between Rs.300 and Rs.400 and the Average Profit Margin (in Rs and in percent) of these Medicines is respectively Rs 205.39 and 63.64%.
e) Purchase price between Rs.400 and Rs.500 There are around 27 Medicines in our pharmacy which is purchased between Rs.400 and Rs.500 and the Average Profit Margin (in Rs and in percent) of these Medicines is respectively Rs 187.49 and 44.14%.
f)
Purchase price above Rs.500 There are around 164 Medicines in our pharmacy which is purchased at above Rs.500 and the Average Profit Margin (in Rs and in percent) of these Medicines is respectively Rs 881.78 and 74.04%.
PURCHASE PRICE (Rs.) BELOW 100 100-200 200-300 300-400 400-500 ABOVE 500
NO. OF MEDICINES
80 AVERAGE PROFIT (Rs) 70 60 50 40 30 20 10 0 12.24% 78.31% 164.61% 205.39% 187.49% 53.5 43.77 44.14 69.19 63.64
74.04
881.78%
PROFIT PERCENTAGE
PERCENTAGE SEGREGATION
The Medicines have been segregated according to their Profit Percentage in the following manner:-
a) Profit Percentage margin between 0 and 25% The profit percentage margin between 0 to 25% consists of around 860 medicines which gives us an average profit of Rs.19.30 and an average percentage of 19.66%. b) Profit Percentage margin between 25 and 50% The profit percentage margin between 25 to 50% consists of around 499 medicines which gives us an average profit of Rs.28.80 and an average percentage of 32.25%. c) Profit Percentage margin between 50 and 75%. The profit percentage margin between 50 to 75% consists of around 106 medicines which gives us an average profit of Rs.281.35 and an average percentage of 60.98%. d) Profit Percentage margin between 75 and 100% The profit percentage margin between 75 to 100% consists of around 64 medicines which gives us an average profit of Rs.209.57 and an average percentage of 90.34%. e) Profit Percentage margin between 100 and 125% The profit percentage margin between 100 to 125% consists of around 197 medicines which gives us an average profit of Rs.442.59 and an average percentage of 104.59%. f) Profit Percentage margin between 125 and 150% The profit percentage margin between 125 to 150% consists of around 96 medicines which gives us an average profit of Rs.343.86 and an average percentage of 135.32%. g) Profit Percentage margin between 150 and 175% The profit percentage margin between 150 to 175% consists of around 17 medicines which gives us an average profit of Rs.33.40 and an average percentage of 161.53%.
h) Profit Percentage margin between 175 and 200% The profit percentage margin between 175 to 200% consists of around 4 medicines which gives us an average profit of Rs.56.54 and an average percentage of 189.91%. i) Profit Percentage margin between 200 and 300%. The profit percentage margin between 200 to 300% consists of around 12 medicines which gives us an average profit of Rs.537.48 and an average percentage of 238.33%. j) Profit Percentage margin between 300 and 600% The profit percentage margin between 300 to 600% consists of around 13 medicines which gives us an average profit of Rs.166.35 and an average percentage of 453.32%.
PERCANTAGE SEGREGATION 0-25% 25%-50% 50%-75% 75%100% 100%- 125% 125%-150% 150%-175% 175%-200% 200%-300% 300%-600%
NO. OF MEDICINES
AVERAGE PROFIT MARGIN (Rs.) 19.30 28.80 281.35 209.57 442.59 343.40 33.40 56.54 537.48 166.35
AVERAGE PROFIT MARGIN (%) 19.66% 32.25% 60.98% 90.34% 104.59% 135.32% 161.53% 189.81% 238.33% 453%
1000 NO. OF MEDICINESAND AVERAGE PROFIT MARGIN (Rs.) 900 860 800 700 600 500 400 300 200 100 0 60.98 28.8 10 90.34 104.59 135.32 281.35 209.57 197 19.3 96 33.4 17 161.53 56.54 4 189.81 238.33 12 13 453 166.35 499 442.59 343.4 537.48
PERCENTAGE SEGREGATION
64
19.66
32.25
H. VOLUME OF SALES ACCORDING TO QUANTITY:It is the quantity or number of goods sold or services rendered in the normal operations of a firm in a specified period. As per our collection of data we have segregated volume of sales according to quantity in the following ways: Volume of sales for the year 2008 2009 and 2009 2010 Medicines whose sales are zero Volume of sales of medicines between 1 50 Volume of sales of medicines between 51 100 Volume of sales of medicines between 101 500 Volume of sales of medicines between 500 1000 Volume of sales of medicines between 1001 2000 Volume of sales of medicines between 2001 3000 Volume of sales of medicines between 3001 4000 Volume of sales of medicines between 4001 5000 Volume of sales of medicines between 5001 6000 Volume of sales of medicines between 6001 7000 Volume of sales of medicines between 7001 8000 Volume of sales of medicines between 8001 9000 Volume of sales of medicines between 9001 10000 Volume of sales of medicines between 10001 20000 Volume of sales of medicines above 20001
NO. OF MEDICINES 800 600 400 200 0 ZERO I - 50 51 100 101 - 500 500 1000 1001 2000 2001 3000 3001 4000 4001 5000 5001 6000 6001 7000 7001 8000 8001 9000 9001 10000 QUANTITY
17 15 7 5 4 3 2 13 4
10001 20000
ABOVE 20001
There are around 200 companies whose medicines are being used in CRH pharmacy. The reason for our segregation of medicines according to company wise is to know about the sales volume and profit volume of the medicines of that particular company.
SALES
SALES BELOW RS.1 LAKH SALES BETWEEN RS.100000-500000 SALES BETWEEN RS.500000-1000000 SALES ABOVE RS.10 LAKH
NO. OF COMPANIES
148 22 6 3
MAJOR COMPANIES
AXA PAREN LABS 26%
DRUG ARRANGED
Supplier name
JOY PHARMACEUTICALS THIRD I SURGICAL
1.2 95.92% RATES IN PERCENTAGE 1 0.8 0.6 0.4 0.2 0 1.67% 0.26% 0.49% 0.04% 0.11% 1.51%
PHARMACY COLLECTION FOR 15DAYS FROM 17TH MAY 2010 TO 31ST MAY 2010
DAY MONDAY TUSEDAY WEDNESDAY THURSDAY FRIDAY SATURDAY SUNDAY MONDAY TUSEDAY WEDNESDAY THURSDAY FRIDAY SATURDAY SUNDAY MONDAY
DATE 17/05/10 18/05/10 19/05/10 20/05/10 21/05/10 22/05/10 23/05/10 24/05/10 25/05/10 26/05/10 27/05/10 28/05/10 29/05/10 30/05/10 31/05/10
SALES 80948 68403.22 76987.78 55754.55 60904.72 82215.91 44198.31 63197.72 67888.14 84541.06 27579.18 58690.91 51927.41 46619.50 61232.70
80948
SALES in Rs.
76987.78 68403.22
82215.91
60904.72 55754.55
44198.31
DATES
Drugs have segregated on basis of VED ANALYSIS Vital category- life saving drugs Essential category-routine drugs Desirable category-rarely used drugs
Reorder level has been set for all the drugs available in pharmacy store using the tools of VED ANALYSIS Reorder level has been calculated on the basis on annual sale Data taken into considerdation
Annual consumption Lead time
Annual sale = annual consumption Average sales = annual sales12 Lead time = 15 days Stock out = average usage 2 Safety stock = stock out * lead time Reorder level = safety stock + (lead time + average usage) Maximum stock = safety stock + reorder level
QTY
LEAD TIME
SAFETY STOCK
REORDER LEVEL FOR LIFE SAVING DRUGS SAFETY STOCK+ (LEAD TIME * AVERAGE USAGE )
RE-ORDER LEVERL FOR LIFE SAVING DRUGS SAFETY STOCK + (LEAD TIME * AVERAGE USAGE)/365 * 30
MAXIMUM STOCK
IN DAYS
SL.NO 1 2
CODE NO. AIR001 AIR002 AIRWAY NO-02 AIRWAY NO-03 AIRWAY NO4.5(PAED)(NO-4) ANAKET INJ 2ML ADRENALIN INJ AMINOPHYLIIN INJ 10ML ANTI SNAKE VENUM INJ 19 10 1.58 0.83 15 15 15 15 15 15 2 1 1 14 118 4 26 14 2 1 4 2
3 4 5
5 139 1150
7 188 1556
1 15 128
1 30 246
AMI002
35
2.92
47
ANT001
30
2.50
15
41
15 8 9 10 11 ARA001 ART001 ATR002 BAC003 ARAVON INJ ARTACIL INJ ATROPIN INJ 1ML BACTERIAL FILTER ASTHALIN SOLUTION15ML BEPARIN INJ 168 121 1384 2 14.00 10.08 115.33 0.17 15 15 15 15 15
12 13
AST004 BEP001
263 36
21.92 3.00
356 49
29 4
56 8
1) There are around 114 life saving drugs in store. 2) Reorder level has been set for three month for bulk store and one month for retail store. 3) Safety stock has been maintained for one month a) Due to fluctuation in demand b) Variation in lead time may due to strike, unavailability of medicine 4) Maximum stock has been calculated a) Avoid over stocking b) Reduce the expiry of medicine
For Routine drugs safety stock has been maintained for 15 days
LEAD
STOCK
OUT
TIME
AVERAGE
SAFETY STOCK
STOCK OUT * LEAD TIME 365 *30
2009 2010
IN DAYS
USAGE 2
2 3
4 5
6 7 8
9 10 11 12 13
14
15
AB PHYLLINE 100MG CAP ABWAL 10ML SUSPENSI ON ACNELAC SOAP ACOCONT IN 75 MG TAB ACTIFED PLUS TAB ADAFERIN 0.1%GEL 15GM AD-30DT TAB AD 10 SACHETS ADVENT 625MG TAB ADVENT 1.2GM INJ ADVENT 300MG INJ AIRWAY NO-02 AIRWAY NO-03 AIRWAY NO4.5(PAED)( NO-4) ALDACTO NE 50MG TAB
15 2837 236.42 15 26 0 2.17 0.00 15 15 1101 225 91.75 18.75 15 15 5 27 0 0.42 2.25 0.00 15 15 15 1000 55 20 19 10 83.33 4.58 1.67 1.58 0.83 15 15 15 15
118.21
1.08
1 34 8 0
0.00 45.88 9.38 0.21 1.13 0.00 41.67 2.29 0.83 0.79 0.42
0 57
353 72
2 9 0
321 18 6 6 3
0.21
0 7 2
12.08
15 377 93
There are around 1000 routine drugs available in the pharmacy store. Reorder level has been set for three month for bulk store and one month for retail store. Safety stock has been maintained for 15 days for routine drugs