Stock Records and Stock Levels
9 minute read
What you will learn
- Describe the bin card, tally card and ledger and what each records
- Keep a record of receipts, issues and balances
- Explain terms used in stock keeping
- Calculate minimum, reorder and maximum stock levels
- Describe how to monitor stock and prevent stock-outs
- Explain why bin cards and ledgers must agree with the shelf
Key points
- A bin card (or tally card) is kept with the stock on the shelf. The ledger is kept in the office or store records.
- Each receipt is added and each issue is subtracted, and the new balance is written each time.
- The shelf count, the bin card and the ledger should all give the same balance.
- Minimum stock = AMC × safety stock months.
- Reorder level = (AMC × lead time) + minimum stock.
- Maximum stock = minimum stock + (AMC × ordering interval).
- A stock-out is prevented by watching the reorder level, ordering on time, and checking records regularly.
Why keep stock records?
Records tell you what you have, what came in, what went out, and what is left. They are the basis for ordering, and they are the evidence that nothing has been lost. Without them, you cannot prevent stock-outs or find where a loss happened.
The records
| Record | Where it is kept | What it shows |
|---|---|---|
| Bin card (stock card) | With the stock, on the shelf or bin | Receipts, issues and balance for one item |
| Tally card | Used in the same way as a bin card, to keep a running count | Quantities in and out, and the balance |
| Ledger (stock ledger) | In the store office | Receipts, issues and balance for each item, kept apart from the stock |
| Receipt and issue vouchers | Filed in order | The documents behind each entry |
The bin card gives a quick answer at the shelf. The ledger is the independent check, kept by a different person where possible.
Layout of a bin card
| Date | Voucher no. | Received from / Issued to | Received | Issued | Balance |
|---|---|---|---|---|---|
| 1 Oct | Opening balance | 500 | |||
| 3 Oct | RV 12 | Supplier | 300 | 800 | |
| 7 Oct | IV 31 | Ward A | 200 | 600 | |
| 12 Oct | IV 35 | Clinic B | 150 | 450 |
The balance is worked out after every entry:
new balance = previous balance + received − issued
Terms used in stock keeping
| Term | Meaning |
|---|---|
| Stock on hand | The quantity actually in the store now |
| Dues-in | Stock that has been ordered but not yet received |
| Dues-out | Stock promised to a unit but not yet issued |
| Earmarked stock | Stock kept aside for a particular unit or purpose, and not to be issued to others |
| Target figure | The stock level that the store aims to hold |
| Provision | The quantity needed, worked out from use, to bring the stock to its target |
| Rate of use | How much of an item is used in a period |
Services and organisations use some of these words differently, so use the meanings in your textbook and your workplace. The ideas are the same everywhere.
Checking the records
A regular stock check compares three things:
- the physical count on the shelf;
- the bin card balance;
- the ledger balance.
All three should agree. If they do not, the difference is a deficiency (less than the record) or a surplus (more than the record). Both must be investigated, explained, and corrected with a proper entry that is approved. Never change a record by writing over it.
Example. The ledger shows 450 tablets. The shelf count is 440.
- Deficiency = 450 − 440 = 10 tablets
Stock levels
Stock levels are limits that tell the store keeper when to order and how much to hold. They use the AMC (average monthly consumption), the lead time and the ordering interval.
minimum stock = AMC × safety stock (months)
reorder level = (AMC × lead time) + minimum stock
maximum stock = minimum stock + (AMC × ordering interval)
- The minimum stock (safety stock) is the lowest the stock should fall. Going below it risks a stock-out.
- The reorder level is the stock at which a new order must be placed. At this point, the stock left covers the lead time and still leaves the minimum stock when the order arrives.
- The maximum stock is the most that should be held. Above it, money is tied up and medicines may expire.
Worked example
AMC = 200 tablets. Safety stock = 1 month. Lead time = 1 month. Ordering interval = 2 months.
- Minimum stock = 200 × 1 = 200
- Reorder level = (200 × 1) + 200 = 400
- Maximum stock = 200 + (200 × 2) = 600
Check. At the reorder level of 400, the order is placed. During the 1-month lead time, 200 are used, leaving 200 (the minimum) when the delivery arrives. If the order is for 400 (the AMC × the 2-month interval), the stock rises to 600, which is the maximum.
Monitoring and preventing stock-outs
A stock-out is when a medicine is not available when a patient needs it.
| Cause | How to prevent it |
|---|---|
| Ordering too late | Watch the reorder level, and order when stock reaches it |
| Order too small | Base the quantity on records, and include lead time and safety stock |
| Long delays in delivery | Add the real lead time, and keep a safety stock |
| Sudden rise in use | Allow for seasons and outbreaks, and review the AMC |
| Stock wasted by expiry or damage | FEFO, regular checks, correct storage |
| Poor records | Keep bin cards and ledgers up to date and checked |
| Pending orders forgotten | Record dues-in, and follow up the supplier |
Good practice:
- Check the balance of each item regularly, for example weekly for fast-moving items.
- Keep a list of items near or below the reorder level.
- Record every stock-out, with its length, and use it to adjust the safety stock.
- Keep contact with nearby units that can lend a small amount in an emergency, and record the loan.
Exam focus
- Draw or describe a bin card with receipts, issues and balance.
- Balance a card or ledger after a series of receipts and issues.
- Calculate the minimum, reorder and maximum stock levels from the AMC, lead time and ordering interval.
- Common mistake: forgetting to carry the balance forward after each entry.
Quick check
Test yourself before you move on. Pick an answer to see the explanation.
1.A bin card shows an opening balance of 500, then receives 300, then issues 200 and 150. What is the balance?
2.The bin card shows 450 tablets but a count of the shelf finds 440. This means:
3.AMC = 200, lead time = 1 month, safety stock = 1 month. What is the reorder level?
4.AMC = 200, safety stock = 1 month, ordering interval = 2 months. What is the maximum stock?
5.Which term describes stock that has been ordered but has not yet been received?