Value Drugs has decided to use the just-in-time method of production and inventory distribution, thereby, limiting the amount of inventories it keeps to a bare minimum.  Typical in the pharmaceutical business is receipt of orders approximately two weeks in advance from when retail distribution outlets want the product on the shelf.  This two-week lead-time is ideal for just-in-time inventory planning, since production, bottling, and shipping of the orders requires about one week.  As well, retail distributors are typically happy to take receipt of items two or three days early.  Value Drugs, as such, will gear it’s production schedule around guaranteed orders, thus producing in quantities according to specific demand.  

The just-in-time method of inventory planning and delivery is a natural inventory management method, because the proposed products will have an expiration date; retailers typically wish for quick product delivery; and production capabilities are expected to be enough to match orders up to the high end of estimated sales. 

The use of the just-in-time inventory method obviates the need for complex calculations concerning the optimal use of space to store products.  Regardless, ample space exists for temporary, short-term storage of products.  This space is climate controlled and adequately secured by steel doors for appropriate security. 

Mr. Formulary has purchased and customized a specific type of inventory software designed for pharmaceutical manufacturers.   This system will track partial orders, invoices, shipments, and orders.  it’s tie-in to accounting software will allow the company to automate it’s own invoicing and collection process.  This just-in-time logistics planning will provide a very efficient inventory system defined by rapid turnover and minimal surplus stocks of product.