International Journal of Science and Research (IJSR)

ISSN: 2319-7064
ResearchGate Impact Factor (2018): 0.28 | SJIF (2018): 7.426

Application of ABC-VED Matrix Analysis to

Control the Inventory of a Central Pharmacy in a
Public Hospital: A Case Study
Dr. Sabah M. Al-Najjar1, Dr. Maha. K. Jawad2, Ola A. Saber3
1
Alturath University College
2
University of Baghdad, College of Administration and Economics
3
Pharmacist

Abstract: The hospital's drug pharmacy is the most important facility in a hospital where large financial resources are allocated for
the purchase of drugs that support therapy of patients. In order to direct these resources efficiently and effectively, it is essential to apply
inventory models to manage the drug inventory in pharmacies. The main objective of this research is to conduct a systematic
classification for the drugs in a central pharmacy inventory of a public hospital. The necessary data about the 138 drugs dispensed were
gathered for the period between 1/1/2018 – 31/12/2018. The ABC (Always, Better, Control), VED (Valuable, Essential, Desirable), and
ABC-VED Matrix analysis were used to group the different types of drugs into three categories, I, II, and III. Data analysis was
conducted by Microsoft Office Excel 2013 and by statistical methods. The VED analysis revealed that (81% of the Annual Drug
Expenditure, (ADE) were allocated to Essential drugs, while categorizing the drugs indicated that (71.47 % of ADE) should be allocated
to category I which includes AV,AE, AD, BV, and CV drug groups. This research concluded that top management should exert high
supervision and control to drugs that fall in category I, then category II, and last category III. This research work is significant because
it augments our knowledge about inventory control in general, and pharmacy inventory control systems in specific.

Keywords: ABC, VED, ABC-VED Matrix Analysis, Pharmacy Inventory Management

1. Introduction The present study is conducted in a central pharmacy of a

public hospital located in one of the provinces in Iraq. The
In response to the development of medical technology and field observation revealed multiple issues such as stock outs
the increased attention paid to the health of citizens, the of vital medicines, spoilage, expiry, and repetitive purchases
number of public and private hospitals and clinics in Iraq has from local pharmacies. It is believed that applying inventory
somewhat increased in the last decade. Meanwhile, the management models such as the ABC-VED Matrix analysis
expenditures of health care delivery has increased would improve and sustain the quality of health care
disproportionally when compared to the financial resources delivered to patients, and should optimize the inventory cost
allocated by the central government to the health care of the drug store of the hospital.
delivery system.
2. Literature Review
Therefore, the pharmacy in a public hospital can be
considered as the most important working facility. It is also Ravinder & Misra (2014) argue that the ABC analysis
observed that the pharmacy inventory management is not (which is based on the Pareto Principle) has proved to be a
well researched in Iraq, which has motivated the researchers good tool to determine which inventory items require close
to delve into this neglected area. To achieve efficiency and control. The authors claim that the ABC analysis is myopic
effectiveness in managing the hospital's pharmacy, any since it depends on the dollar volume criterion which is no
public or private hospital's administration should make sure longer adequate for today's businesses to survive. Global
that the inventory of all required drugs is available when businesses should operate to provide customers with the
needed. Therefore, a close supervision on vital drugs, right products in the right time, quantity, and quality. The
prevention of shortages or stock outs, and prioritizing of authors reviewed a large body of research and literature and
purchasing orders is deemed very important, for it could have concluded that in order for ABC analysis to be more
bring great savings in a pharmacy store budget. Many effective, it should be coupled with other approaches such
pharmacy inventory management models have been as: Data Envelopment Analysis, Analytical Hierarchy
proposed in the literature, however, the ABC-VED Matrix Process, Genetic Algorithms, and Neural Networks. Shah et
analysis is one of the most applied pharmacy inventory al. (2015) stated that the main principle of inventory control
management model in the world. The ABC model, which is is the ABC which is based on cost criteria, while the VED
based on the Pareto principle, classifies pharmacy inventory that is based on the criticality of drug items. The authors
according to their annual consumption, while the VED relies claim that mismanagement in drug categorization and
on the functional importance of medicines in classifying the expenditures negatively affect the community health. The
pharmacy inventory. The ABC-VED Matrix considers both study applied the ABC-VED matrix, and the study sample
the medicine's cost and its functional importance in included six health centers and lasted from December 2012
managing the pharmacy inventory. to December 2013. The authors grouped drugs in each health
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Paper ID: ART20204180 DOI: 10.21275/ART20204180 1328
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ISSN: 2319-7064
ResearchGate Impact Factor (2018): 0.28 | SJIF (2018): 7.426
center by ABC, VED, and then coupled the two methods to this study the authors attempted to properly manage the drug
result into the ABC-VED matrix. The analysis revealed that inventory in a pharmacy to create a balance between
more financial resources were allocated to less important inventory costs and drug levels to satisfy patients' needs. In
and desirable drugs, while less money were allocated to vital this research, three inventory techniques were applied which
and A type drugs. The results of this study should draw the are: ABC analysis, VED analysis, and ABC-VED matrix
attention of top management in allocating financial analysis. The study concluded that applying ABC analysis of
resources in the future to realize best drug control. Santhi & drug inventory or VED independently does not work
Karthikeyan (2016) indicated that the inventory planning properly, because an inexpensive drug may be life saving
and control systems perform a significant role in the and vise-versa, therefore analyzing drug inventory by the
pharmaceutical industry, because managing inventory is so ABC-VED Matrix can lead to optimal budget allocation and
essential regardless of whether it is domestic or provides better patient care, as well as preventing medicine
international, small or big. Given that raw materials in a shortages in the pharmacy. Gunergoren and Dagdeviren
pharmaceutical industry have expiry date, the authors claim (2017) mentioned that hospitals should keep stocks of
that such factories keep a minimum of safety stock to help medicines and supplies in valid and sufficient quantities to
track their orders smoothly. In their article, the authors support the services offered to patients without interruption.
presented a comprehensive review of pharmaceutical They added that hospitals must keep drugs according to their
inventory literature since 1968 along with the relative importance and cost to minimize the total annual inventory
models that the literature has offered. The review concluded cost. The authors conducted their research to determine the
that there are two objectives for pharmacy inventory control, significance of medications in a hospital's pharmacy using
the first is to keep medications available in stock, not ABC, VED, and ABC-VED analysis. Based on the analysis,
expired, when needed, the second is to reduce medications the order quantities were determined using the Economic
cost as low as possible. We believe that profit should be a Order Quantity technique. Due to the huge number of drugs,
third goal, since a pharmacy must make profit to survive and the authors devoted an Excel-based model to perform the
to serve its customers, as well as achieving a return on its analysis quickly and efficiently. The searchers concluded
investment. Pund et al. (2016) suggest that significant that grouping drugs according their cost and importance
improvements may be achieved in any hospital's inventory should improve the inventory planning and control
and expenditures by applying inventory planning and control decisions, and is capable of achieving potential costs
tools. The authors attempted to categorize drugs according savings. Saxena, Gokhale, & Kadam (2017), stated that
to two criteria: cost and criticality, these two criteria were efficient inventory management for a pharmacy involves the
used to identify the drugs that need strict management procurement of the right drug, at the right time, in the right
control. The tools employed were: ABC, VED and ABC- amount, and at the right cost. The authors believe that ABC-
VED Matrix analysis. The study was conducted for a drug VED analysis is an effective tool to control the drug
store of GMCH, Aurangabad, India, for the period between inventory of a pharmacy through identifying the drugs that
April 2014 to March 2015. The sample study consisted of require strict control and the drugs whose purchase may be
119 drug items used by the medical store. The analysis postponed. The study included a sample of 145 drugs from a
categorized drugs into three groups: group I requires top tertiary care hospital. The drugs, their annual consumption,
management control, while groups II and III require lower and the unit cost of the drugs were determined by a expert
managerial control by middle and lower management. pharmacist. An ABC-VED analysis was conducted by the
Ahlawat. et al. ( 2016), mentioned that approximately one- authors. The analysis revealed potential cost saving and
third of a hospital budget is spent on buying different service level improvement. The authors concluded that
materials and supplies including medicines, which requires ABC-VED analysis is very essential to reduce excessive
an effective and efficient drug inventory planning and inventory cost and is an effective tool for drug inventory
control system to supervise important drugs, to prevent control. In a recent study, Pokhariya, & Mathur (2018),
wastage, and to set priorities for the purchase and the consider the pharmacy as the most important facility in the
distribution of drugs. The authors claim that analysis of healthcare system where huge amounts of capital is spent on
medicine expenditures is rarely done in Ayurveda hospitals purchasing various types drugs. The authors believe that an
since it is not required for the annual evaluation. The ABC efficient inventory management system should be applied to
study analysis was conducted in a pharmacy of an Ayurveda control essential drugs and to set priorities to purchase them,
Institute. The analysis revealed that group A requires close and to achieve better patient care and optimal use of
day-to-day control, and that the cost factor should be taken resources. Three inventory control methods where reviewed
into consideration especially for group A. The study and analyzed in the study: ABC, VED, and ABC-VED. The
recommended the use of ABC analysis as a tool which can review revealed that drug inventory analysis plays an
help the hospital management in the coming year to allocate essential role in the management of pharmacies, and that the
financial resources, in addition it can inform management in techniques reviewed in this article can contribute to the
advance about the provisions required in the future such that improvement of patient care, customer relationships, and
a sound future decision is made on real economic data. In improves financial allocation. Therefore, pharmacists can
their research Ceylan & Bulkan (2017) stated that a improve the pharmacy performance by planning, designing
pharmacy is one of the most significant facilities in a and organizing medical stores and inventory.
hospital in which extensive money resources are allocated,
and therefore it is considered as a difficult facility to manage Taddele et al. (2019) conducted their study to analyze
due to the various types of drugs stored into it. Despite that, Arbaminch Hospital (Ethiopia) inventories by implementing
the drugs must be made available and valid and priorities the ABC-VED matrix. The sample study consisted of 218
should be set as to when to buy and to distribute them. In drugs, and the study covered the period between 2013-2015.
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Paper ID: ART20204180 DOI: 10.21275/ART20204180 1329
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ResearchGate Impact Factor (2018): 0.28 | SJIF (2018): 7.426
The authors were able to classify drugs into three categories:  Decoupling operations refers to holding inventories or
I, II, and III. Accordingly, items that fall into category I buffer inventory to help operations to continue until the
require strict management control, while items that belong to production problems are solved elsewhere in the
category II and III should be controlled by middle and lower manufacturing process.
management. The study concluded that ABC-VED analysis  Protection against stock-outs, unexpected increase in
should be implemented to manipulate resources more demand increase the risk of shortages, therefore safety
efficiently and effectively, to reduce wastages, and drug stock can reduce the risk of stock-outs.
inventory shortages in health care facility studied in this  Protecting from price increase, holding extra inventories
research. Other authors such as Gupta & Nigah (2010), Mani can help the organization from price increases or inflation.
et al. (2014), Singh (2015), Kumar et al. (2016) and Hazrati The organization must make sure that the stocks are stored
et al. (2018) have conducted similar researches but in under the right condition to maintain their quality.
different locations, while other researchers have associated
ABC method with more sophisticated techniques such as In general, inventory costs are grouped into three categories:
coupling ABC with the Analytical Hierarchy Process Ordering costs, Holding or Carrying cost, and Stock out
(Partovi & Burton,1993), ABC with the Weighted Linear cost.
Optimization (Ramanathan, 2006), and ABC with the  Ordering Cost: This cost is incurred when a purchase or
Artificial Intellegence (Yu, 2011). manufacturing order is issued. The ordering cost increases
From the previous review, it could be concluded that the when the number of orders increases and vice-versa. The
interest in the ABC-VED used alone or integrated with other order size should be balanced economically, since
methodologies in inventory management of pharmacies is ordering excess inventory shall result in an increase in
increasing due to the possible benefits that could be holding costs, while ordering less than required results in
harvested such as: cost savings, healthcare improvements, shortage or stock out costs. The elements of ordering cost
service-level improvements, wastages and shortages include: cost of order preparation and forwarding,
reductions, better patient-pharmacy relationships, and inspection cost, payment cost, staff cost, cost of order
improving the community healthcare. acceleration, and communication cost.
 Holding or Carrying Cost: This cost is due to stocking
3. Theoretical Background inventory items inside or outside the organization, and it
consists of the following elements: cost of capital,
Inventory is any item stocked in an organization for future stocking cost, spoilage cost, obsolescence cost, insurance
use or consumption. Inventory consists of six groups which cost, material handling equipments, and IT software
are: Raw Materials, Work-in-Process, Finished Goods, applications.
Maintenance and Repair, Decoupling Inventory, and  Stock out Cost: This cost is also referred to as the
Pipeline Inventory. We shall describe each type briefly as shortage cost which is a result of not having the inventory
follows: item when needed. The shortage of some inventory items
 Raw Materials refer to any item used to manufacture may be tolerable sometimes, however the shortages may
components or finished products for sale or consumption. result in severe losses for the organization and it may
Raw materials may be purchased by the organization or damage its credibility. In the case of pharmaceutical
extracted by it. drugs, the shortage may cost the life of a patient.
 Work-in Process inventory is created through the
manufacturing process, and it refers to items that are 4. Pharmacy Inventory Management Models
unfinished yet. Some of these unfinished inventory may
be sold as finished components such a car carburetors that According to Santhi & Karthikeyan (2016), the role of an
is sold for replacement , or used to assemble a car. inventory system is very much significant in the
 Finished Goods refer to items that have gone through the management of pharmacies regardless of the size of the
production process and are ready for sale or use. pharmacy or whether it functions within a hospital or it is
 Maintenance and Repair Inventory consists of items that independent. Every pharmacy faces two challenges: the first
are used to maintain the production facilities running. The is to keep medicine in a vital state and in a sufficient quality
consumption of such items depends on machine and quantity, and the second is to keep the inventory costs at
breakdown incidents, or planned maintenance schedules. minimum. Since these two objectives are not easy to
 Decoupling Inventory refers to the inventory used to achieve, researchers in this field (since 1968) were
maintain the operation of the production process motivated to device pharmacy inventory models to deal with
uninterrupted. this issue. In this research, we shall enumerate the models
 Pipeline Inventory, refers to the inventory on its way to only. However, the interested reader can view them in
the customer. The customer could be internal or external. Santhi & Karthikeyan. These models are:
 Models for Pharmaceutical inventory with RFID (Radio
According to Pokhariya and Mathur (2018), the inventory Frequency Identification) technology.
performs several functions which are:  Models for Pharmaceutical inventory with drug pharmacy.
 Meeting anticipated customer demand which refers to  Models for Pharmaceutical inventory with blood
inventory held to satisfy expected or anticipated demand. pharmacy.
 Meeting production requirements, manufacturing  Models for inventory with perishable pharmaceuticals.
companies often built inventories during off-season to  Models for inventory management of pharmaceutical
satisfy demand during high demand seasons. inside hospitals.

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Another classification of inventory management models is 4.1 ABC Analysis
presented by Ahlawat et al. (2016) and is depicted in Figure
(1). With respect to ABC, VED, and ABC-VED Matrix The ABC analysis is one of many tools used for inventory
analysis, we shall present them in detail later in this control. This analysis is known as the Pareto principle which
research. For the rest of the models, we shall provide a brief is proposed by the Italian Economist Velfredo Pareto (1906)
description as follows: who argued that 80% of a nation's wealth is owned by 20%
 FSN: Fast moving, Slow moving and Nonmoving. It is of the population, and 20% of the nation's wealth is owned
based on issues from stores. by 80% of the population. This principle is also referred to
 SDE: Scarce, Difficult, Easy to obtain classification based as the 20:80 ratio. In the 1940's, the Pareto principle was
on availability of items. advanced by Joseph Juran who is an American engineer
 HML: High, Medium and Low based on unit price. credited as being the father of quality control. Juran was the
 XYZ: Based on value analysis. Used in analysis of slow first quality guru who decided to call the 20:80 ratio as the
moving items. "Pareto Principle". The principle was applied in many
 SOS: Season Off Season. Based on seasonal requirement. business metrics to separate between the "vital few" (20%)
from the "trivial many" (80%). Based on this principle, the
ABC analysis was developed in the 1950s to help managers
to distinguish among the vital few of inventory items
(referred to A items), from the trivial many (referred to C
items), while the B items are referred to as interclass items.
The A items constitute about 10% of inventory items, yet its
annual consumption amounts to 70%-80%, the B items
constitute 20% of all the inventory items and amount to
10%-15% of total annual inventory consumption, while C
items constitute 70% of total inventory items and amount to
5%-10% of total annual consumption (Ceylan & Bulkan,
2016, Ravinder & Misra, 2016). Figure (2) depicts a
schematic representation of ABC analysis, while Table (1)
presents some characteristic of the ABC analysis. The
advantages of ABC analysis may be summarized as follows:
it reduces unnecessary investment in inventory, improves
inventory control, saves time spent on inventory control, and
it requires less staff to control all items stocked. Despite
these advantages, the main drawback of the ABC analysis is
that it relies on the consumption value, i.e. it depends on the
cost criterion only.
Figure 1: Classification of Inventory Models
Source: Ahlawat et al., 2016, p. 425.

Figure 2: ABC Graphical Representation

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Table 1: Some Characteristics of ABC Analysis Table 2: ABC-VED Matrix
Item Category A B C VED
V E D
Quantity (approx.) 10% 20% 70% ABC
Consumption Value A AV AE AD
75% 20% 5%
(approx.) B BV BE BD
Control Strict Normal Low C CV CE CD
Top Middle
Supervision Clerical Staff
Management Management 5. Research Methodology
Safety Stock Low Medium High
Centralized
Purchase Authority Centralized Decentralized 5.1. Research Problem
/Decentralized
Lead time short Medium Long
Source: The frequent field observations conducted by the authors
https://www.blogger.com/profile/15521318744913553315 revealed multiple issues such as stock outs of vital
medicines, spoilage, expiry, and repetitive purchases from
4.2 The VED Analysis local pharmacies, in addition to the absence of applying a
defined inventory model in the management of the central
According to Devnani et al. (2010), Gupta el al. (2007) the pharmacy.
VED analysis is based on the drug's functional importance
and priority to the patient's health. As a consequence the 5.2. Research Objectives
drug items are divided into three categories or groups: Vital
(V), Essential (E), and Desirable (D). The V class drugs are The analysis conducted in this research attempts to achieve
considered to have high functional importance such as life the following objectives:
saving drugs whose non-availability cannot be tolerated.  Provide a systematic classification for the drugs in the
Examples of such drugs include: vaccines, serums, insulin, central pharmacy inventory using the ABC, VED, and
antibiotic, diogxin , etc., these drugs should continuously be ABC-VED Matrix analysis.
available in the pharmacy.  Improve the health delivery systems of the hospital.
 Direct the attention of hospital's management to the
The E class drugs are supposed to have lower severity (but necessity of reducing shortages, spoilage, and repetitive
still useful for serious diseases) and are used for less life purchases of drugs.
threatening cases. The non-availability of this category can  Shed the light on the possibility of improving the Central
be tolerated for 2-3 days because alternative drugs may be Pharmacy's performance through the use of pharmacy
used. Examples of such medicines are: ranitidine, phenytoin, inventory models presented in this research.
chloroquine, etc., and such items are stocked in medium
quantities. In addition the purchase of the E drugs should be 5.3. Materials and Methods
based on rigid requirements and strict control.
The present research was conducted at a central pharmacy of
The D class drugs have lowest importance and are used for a public hospital. By the aid of our co-author (the
therapy of slight diseases, examples of such drugs are: pharmacist), the data collected (quantities, costs, and VED
vitamins, aspirin, metformin, paracetamol, sun screen classification) belong to the period between 1/1/2018 to
lotions, etc. The absence of such drugs could be tolerated for 31/12/2018. The total number of the drugs dispensed
a longer time. Drugs falling in this category are stocked in amounted to 138 drugs throughout the study period. The
small quantities, and the purchase quantities are based on ABC, VED, and ABC-VED Matrix were used as to study
usage forecast. the inventory of the central pharmacy. All the analysis
performed in this research was conducted using Microsoft
4.3 The ABC-VED Matrix Analysis Office Excel 2013, and by some statistical methods.

As we mentioned earlier in this work, when ABC analysis 5.4. Research Significance
and VED analysis are used independently they do not lead to
effective and efficient drug inventory control. Therefore, This research work is significant because it could assist the
researchers in this field (Vaz, et al., 2008, Khurana, et hospital's administration to improve the central pharmacy
al.,2013, Pund et al., 2016) have attempted to couple both inventory management system. The research may augment
methods to achieve better results in managing drug our knowledge about inventory control in general, and
inventory. The combination of these two tools results in a pharmacy inventory control in specific. From the results
3x3 matrix as depicted in Table (2). By cross tabulating this realized in this research, top management can allocate
table, it is possible to obtain 9 subclasses: AV, AE, AD, BV, budget resources to drugs that fall in category I in the first
BE, BD, CV, CE, CD. Furthermore, these nine subclasses place, then for drugs in the less important categories. The
are grouped into three categories: I, II, and III. Category I results achieved here could suggest standards to improve the
includes items AV, AE, AD, BV, CV. Category II is performance of the central pharmacy by planning
comprised of items: BE, BD, CE. While category III assessment and by prioritizing the acquisition of medicines
includes items CD. to increase the efficiency of using the hospital's financial
resources, and to improve the healthcare delivery system.

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6. Analysis, Results, and Discussion million ID and amounted to 6.84% of annual consumption.
Figure (3) presents a schematic representation of the ABC
In the first step of analysis, the annual drugs dispensed analysis conducted here. Due to its significance, class A
throughout the period of study (1/1/2018 – 31/12/2018) were items requires strict top management control, low safety
obtained from the hospital's central pharmacy along with the stock, centralized purchase authority, and short lead times.
corresponding costs of each drug type. The drug population Class B items require normal control, middle management
consisted of 138 drugs. In the second step, the cost of each supervision, medium safety stock, decentralized purchase
drug was multiplied by the quantity of drugs dispensed to authority, and medium lead time. Despite their high number,
obtain the annual consumption cost or the ADE. In the third class C (104 drug items), they require low control, clerical
step, ADE were arranged in a descending order (i.e. from staff supervision, high safety stock, decentralized purchase
highest to lowest). In the fourth step, the drugs were authority, and long lead times.
classified as A, B, or C according to their ADE and
following the Pareto classification 70%, 20%, and 10%. It Table 3: Results of ABC Analysis
can be observed from Table (3) that ADE is about 1,461 Percentage of ADE in Cumulative
No. of Items ADE
millions ID/year (about 1.2 million US Dollars). Table (3) Group items Milli ADE
In the Group Percentage
approximately 100ons Percentage
also reveals that 9.4% (13 drug items) fall into Class A with
A 13 9.4% 996 68.18% 68.18%
ADE of 996 million ID, and amount to 68.18% of annual
B 21 15.3% 365 24.98% 93.16%
drug consumption. While the drugs that fell into group B C 104 75.3% 100 6.84% 100%
constituted 15.3% (21 drug items) with ADE 365 million ID, Total 138 100% 1,461 100%
and amounted to 24.98% of annual consumption. Finally
class C constituted 75.3% (104 drug items) with ADE of 100

Figure 3: Schematic Representation of ABC Result Analysis

As it was mentioned earlier in this research, the ABC Table 4: VED Result Analysis
analysis depends only on the cost value of the drugs Drug Type Quantity % of Drug ADE (ID) % of ADE
dispensed, and it does not consider the functional V 12 8.69 264,572,776 18.1
importance of the drugs. The functional importance of the E 92 66.68 1,183,962,932 81.0
drugs should be taken into consideration to augment the D 34 24.63 12,665,539 0.9
health service delivered to patients. Therefore, we took our Total 138 100.00 1,461,201,247 100.0
analysis one step further by classifying drugs as Vital,
Essential, and Desirable. By the aid of our co-author, the By associating ABC analysis (Table 3) with VED analysis
pharmacist, the drugs were classified according to their (Table 4), we obtained the ABC-VED Matrix as depicted in
functional importance as it is presented in Table (4). This Table (5), and Table (6) provides more details. From Table
classification revealed that 8.69% (12 drug items) are vital (5) we observe that nine subclasses could be derived from
and constitute 264,572,776 ID and their corresponding this association: AV, AE, AD, BV, BE, BD, CV, CE, and
percentage of the ADE is 18.1% , 66.68% (92 drug items) CD. Based on the categorization presented in Table (2),
belong to class E and their share of the annual consumption these nine subclasses are grouped into three major
was 1,183,962,932 ID and constituted 81% of the ADE. The categories: I, II, and III as provided in Table (7).
remaining 24.63% (34 drug items) belong to class D, the
annual consumption of this class amounted to 12,665,539 ID Category I includes subclasses AV, AE, AD, BV, and CV.
and makes 0.9% of the ADE. This category contains 23 drugs and represents 16.67% of
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the drugs population studied, and its ADE was 1, 044, 366, previous studies cited in Table (9). The results of the tests
767 ID which accounts to 71.47% of the total ADE. assisted the hypothesis.
Category II consisted of 58.69% (81 drugs) and its annual
consumption was 404,314,694 ID which represents 27.67% Table 5: Results of ABC-VED Matrix Analysis
of the total ADE. The third category 24.64% (34 drugs) Classification V E D Total
totaled 12,519,786 ID and represent 0.86% of the ADE. A 2 11 0 13
B 1 20 0 21
The items in category I (23 drugs) should strictly be C 9 61 34 104
controlled by top management, safety stock levels, and Total 12 92 34 138
consumption should, also, be monitored continuously. On
one side, any shortages in this category can harm the health Table 6: ABC-VED Result Analysis
delivery service system, because these items have high V E D
Classification Total
functional importance whose non-availability cannot be Qtty % Qtty % Qtty %
tolerated. On the other side this category consumes 71.47% A 2 1.45 11 7.97 0 0 13
of the ADE and should be given high priority by top B 1 0.72 20 14.5 0 0 21
management. C 9 6.52 61 44.20 34 24.64 104
Total 12 92 34 138
The drugs in category II (83 drugs) are considered to be
essential and their cost is average. Although this category Table 7: Results Analysis of Drugs' Categories
has lower severity and is used for serious diseases, it still % of %
Category Quantity of Drugs ADE
requires moderate control by middle level management to be Drugs ADE
I 23
exercised on it. The absence of drugs in this category can be 16.67 1,044,366,767 71.47
(AV,AE,AD,BV,CV)
tolerated for few days only, through using alternative drugs. II 81
58.69 404,314,694 27.67
(BE,BD,CE)
The drugs in category III are desirable, inexpensive, and III 34
have lowest importance. These drugs are used for therapy of 24.64 12,519,786 0.86
(CD)
slight diseases. Orders should be done on periodical basis, Total 138 100.00 1,461,201,247 100.00
and the absence of such drugs could be tolerated for longer
time. Lower level management should be in charge of drugs Table 8: Distribution of ADE (in millions ID*) According
in this category since its share of the ADE is less than 1%. to the Models Studied
Figure (4) presents the distribution of the three categories ABC Analysis VED Analysis ABC-VED Categories
schematically. Furthermore, Table (8) provides the Class Qtty. ADE Class Qtty. ADE Categ. Qtty. ADE
distribution of the ADE according to the three models A 13 996 V 12 265 I 23 1,044
investigated in this research. From this table it could be B 21 365 E 92 1,183 II 81 404
inferred that classifying drugs into three categories offers a C 104 100 D 34 13 III 34 13
better financial resources to the drugs grouped into these Total 138 1,461 138 1,461 138 1,461
categories vis-à-vis the other models, increases the service  1 USD=1,215 ID
level (i.e. drug availability), and improves the health
delivery system.

In order to assess the results of this research, the authors

have compared the results attained in this work with the
results of the most recent studies as it is presented in Table
(9). The authors conducted one step which is different from
previous studies and that by computing the Coefficient of
Correlation for the results of this study with the average
results of the previous studies for each class or category. The
Coefficients of Correlation for the ABC, VED, and category
I, II, III were 0.998, 0.977, and 0.801 respectively. Using
statistical methods, the authors tested the coefficients of
correlation for significance at n=6, s.l.= 0.05, and d.f.= 4 to
assist or to deny the hypothesis that the results of this
research are correlated significantly with the results of the Figure 4: Distribution of Drugs' Categories

Table 9: Comparison Results of Previous Studies with Present Study

Devnani Taddele Singh Saxina
Class or Pund et Hazrati et Guner Cylan & Present Coefficient of
et al. et al. et al. et al. Total Average
Category al. 2016 al. 2018 Goren 2017 Bulkan 2017 Study Correlation
2010 2019 2015 2017
A 13.78 15.14 11.23 15.2 16.8 5.7 10 10.31 98.16 12.27 9.4
B 21.85 22.47 24.6 23.4 21.8 11.2 23 21.78 170.1 21.26 15.3 0.998
C 64.37 62.39 75.4 61.4 61.8 83.1 67 67.91 543.37 67.92 75.3
V 12.11 31.19 12.3 3 35.3 10.55 24.2 23.31 151.96 19.00 8.6
E 59.38 67.43 61.5 59 50.4 19.43 14.01 55.15 386.3 48.29 66.68 0.977
D 28.51 1.38 26.2 38 14.3 70 61.78 20.84 261.01 32.63 24.63
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I 22.09 39.91 21.38 19 47.9 83.76 29.94 75.25 339.23 42.40 71.47
II 54.63 59.17 58.27 58 43.7 13.54 24.84 22.18 334.33 41.79 27.67 0.801
III 23.28 0.92 20.32 23 8.4 2.7 45.22 2.57 126.41 15.80 0.86

7. Conclusions International Journal of Health Sciences and Research.

Vol.2, No.1. pp.11-17.
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