Inventory and Supply Management Flashcards

A healthcare facility is evaluating two suppliers for IV solutions. Supplier A offers a lower unit price but has a 15% defect rate. Supplier B charges more but has a 1% defect rate. Which supplier is typically preferred from a supply management perspective?

Answer: Supplier B, because quality and total cost including waste and rework must be considered

A high defect rate inflates total cost through waste, rework, and patient safety risk, making Supplier B's higher unit price more economical overall.

Which of the following BEST describes a Group Purchasing Organization (GPO) in healthcare supply chain?

Answer: A consortium that negotiates contracts on behalf of member facilities to achieve volume discounts

A GPO aggregates purchasing volume across many member facilities to negotiate lower prices and favorable contract terms from suppliers.

An ABC analysis of hospital supply inventory would categorize items based on:

Answer: Annual consumption value, with 'A' items representing the highest value

ABC analysis ranks inventory items by their annual consumption value so that the most resources and controls are applied to high-value 'A' items.

What is the function of a materials management information system (MMIS) in a healthcare setting?

Answer: To automate and track purchasing, inventory levels, and supply chain transactions

An MMIS integrates purchasing, receiving, inventory tracking, and usage data to streamline supply chain operations and improve visibility.

Which metric measures the number of times inventory is sold or used over a specific period, indicating how efficiently stock is being managed?

Answer: Inventory turnover ratio

The inventory turnover ratio measures how many times inventory is consumed and replenished over a period, with higher ratios generally indicating efficient use.

A hospital supply manager is implementing a Kanban system for clinical supplies. What is the core principle of this approach?

Answer: A visual signal (card or empty bin) triggers replenishment when stock reaches a set level

Kanban is a pull-based system where a visual cue — such as an empty bin or card — signals that replenishment is needed, reducing both stockouts and overstock.

When a healthcare facility places a purchase order, which document formally authorizes payment to a vendor after goods are received?

Answer: Invoice matched against a purchase order and receiving report (three-way match)

Three-way matching compares the purchase order, the receiving report, and the vendor invoice before authorizing payment to prevent overpayment and fraud.