Which of the following inventory management analyses divides inventory items into three categories based on their annual consumption value or usage?

1. A

   SOS analysis

2. B

   ABC analysis

3. C

   SDE analysis

4. D

   FSN analysis

Appeared in: Bihar NHM CHO-2025

Explanation

• ABC analysis, standing for 'Always Better Control', is an inventory management technique that classifies items based on their annual consumption value.
• It follows the Pareto principle (80/20 rule), where a small percentage of items (Category A) accounts for a large majority of the total value.
• Category A items are high-value and require strict control, Category B items are moderate-value with moderate control, and Category C items are low-value with simple control.
• This method allows organizations to focus their resources and control efforts on the most financially significant items.

Why Other Options Were Wrong

• Option A: SOS analysis classifies items based on their seasonality (Seasonal, Off-Seasonal), not their annual consumption value. It is used for items with demand that varies with the time of year.
• Option C: SDE analysis categorizes items based on their procurement difficulty (Scarce, Difficult, Easy). It focuses on the availability and sourcing of items, not their financial value.
• Option D: FSN analysis classifies items based on their rate of consumption or turnover (Fast-moving, Slow-moving, Non-moving). It is concerned with how quickly items are used, not their monetary worth.

Related Visual

• Visual 1: Infographic: A pie chart illustrating the ABC analysis categories, showing Category A as a small slice of items (10%) but a large slice of value (70%), Category B as a medium slice for both (20%), and Category C as a large slice of items (70%) but a small slice of value (10%).
• Visual 2: Flowchart: A flowchart showing the steps to perform an ABC analysis: 1. List all items. 2. Determine annual consumption for each. 3. Calculate annual consumption value. 4. Rank items by value. 5. Classify into A, B, and C categories.

Clinical Relevance

• Nursing practice connection: This is primarily an exam-oriented knowledge point with limited direct bedside application, so retain Inventory Management Techniques (ABC Analysis) as background academic context rather than a clinical decision trigger.
• In a hospital pharmacy, ABC analysis is critical for managing drug inventory. High-cost, life-saving drugs (Category A) like specific chemotherapies or new biologics are tightly controlled, while common, low-cost supplies (Category C) like saline flushes or gauze are managed more loosely.
• This method ensures that the most significant portion of the pharmacy budget is monitored closely, preventing stockouts of critical medications and minimizing financial losses from expired high-cost drugs.
• What if? If a hospital used FSN analysis instead of ABC for financial control, it might over-stock expensive but slow-moving drugs (e.g., a rare antidote) while under-stocking cheap but fast-moving essentials, leading to both financial inefficiency and potential patient care issues.

How to Approach the Question

• First, identify the core requirement of the question. The keywords are 'inventory management', 'three categories', and 'annual consumption value'.
• Next, recall or analyze the definitions of the inventory analysis methods provided in the options.
• SOS analysis relates to seasonality.
• SDE analysis relates to procurement difficulty.
• FSN analysis relates to the speed of consumption.
• ABC analysis directly links to the 'annual consumption value' and categorizes items into A, B, and C based on this value, matching the question's criteria perfectly.

Concept Tested & Keywords

• Concept Tested: Inventory Management Techniques (ABC Analysis)
• Stem keywords: inventory management, divides inventory, three categories, annual consumption value
• Lead-in keywords: Which

Question ID

QPeeVE9wF8V9MP8FfTJ1mF

Copy ID

Reference Book

E6 Textbook of Nursing Management and Leadership I. Clemen — Subpart B (pp 328-654 of 982) p. 328-654