Nursing Management


ABC, VED, HML Analysis in Material management


Objectives of Inventory Control

  1. To keep the investment on inventories to the minimum.
  2. To minimize idle time by avoiding stock outs and shortages.
  3. To avoid carrying cost.
  4. To improve quality of care with lesser inventory.
  5. To avoid obsolescence of inventor

Techniques in Inventory Control

 ABC Analysis

A-    Items

  1. Tight controls

  2. Rigid estimates  of requirements

  3. Strict and close watch

  4. Safety stocks should be low

  5. Management of items should be done at top management level.

B-    Items

  1. Moderate control

  2. Purchase based on rigid requirements

  3. Reasonably strict watch and control

  4. Safety stocks moderate

  5. Management be done at middle level

C-    Items

  1. Ordinary control measure

  2. Purchase based on usage estimates

  3. Controls exercises by store keeper.

  4. Safety stocks high

  5. Management be done at lower levels..

Class            Number of items                     Rupee value in items

A                     10% of total items                                             70%

B                      20% of total items                                             20%

C                     70% of total items                                             10%

FSN Analysis

An understanding of the movement of items helps to keep proper levels of inventories by deciding a rational policy or reordering. This method is based on the fact that some stock items have a much higher annual usage value than others. This after doing a cost analysis, stock items are separated into three classes with the following characteristics


The stores when subjected to analysis based on their criticality can be classified into vital, essential and desirable stores. This analysis is termed as VED analysis.

  1. Vital: items without which treatment comes to standstill: i.e. non- availability can not be tolerated.

  2. Essential: items whose non availability can be tolerated for 2-3 days, because similar or alternative items are available.

  3. Desirable: items whose non availability can be tolerated for a long period. Although the proportion of vital, essential and desirable items varies from hospital to hospital depending on the type and quantity of workload, on an average vital items are 10%, essential items are 40% and desirable items make 50% of total items available.

Although not included in scientific VED analysis, in some public organizations which are static or inefficiently managed, there is a peculiar category of ā€˜Uā€™ items which can be grouped as unnecessary. These unnecessary items get purchased due to the following reasons.

a)      Thoughtless continuation of previous purchase.

b)      Indifferent attitude towards hospital formulary

c)      Fear of change

d)      Poor supervision and control

e)      Unfair practice due to vested interest.

SDE Analysis

ABC & VED Analysis (Matrix module: criticality Vs cost)

It is possible to conduct a two dimensional analysis taking into consideration cost on one hand , i.e. A,B,C categories, and critically VED on the other. Findings of ABC and VED analysis can be coupled and further grouping can be done to evolve a priority system of management of stores:

Coupling matrix model

                                                Cat I                Cat II                           Cat III

                                                  V                      E                                   D

                        A                       Av                   Ae                                Ad

                        B                        Bv                    Be                               Bd

                        C                       Cv                    Ce                                Cd

An example for the coupling matrix model for equipment between criticality and cost








X-ray machine


Air- curtains





Electric cautery


Ultrasonic wash machine



Oxygen regulator


Patient trolley


Electronic BP machine




  1. Kulkarni G R. Managerial accounting for hospitals. Mumbai: Ridhiraj enterprise; 2003.

  2. Ghei P N. Selected reading in hospital administration. New Delhi: Indian hospital association. 1990.

  3. Pai P. Effective hospital management.( 2 nd edn).  Mumbai: the national book depot; 2003

  4. Kumar R& Goel SL. Hospital administration and management. Vol 1 ( first edn).New Delhi: Deep & deep publications;

  5. Gupta S& Kanth S. Hospital stores management, an integrated approach.( First edn). New Delhi: Jaypee brothers; 2004.

  6. Basavanthappa B T. Nursing administration. ( Ist edn). Newdelhi: Jaypee brothers medical publishers (p) ltd; 2000

This page was last updated on: 19/12/2020