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purch/piricing g s


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advantages of having a manufacturer as vendor
1)decrease costs
2)specialized assistance programs
3)expertise in product line
advantages of having a wholesaler as a vendor
1)many products
2)discount pricing/extend credit
3)electronic order equipment
4)local (provide daily delivery)
5)can order small quantities
disadvantages of having a wholesaler as a vendor
1)staff not as knowledgeable regarding products
2)higher prices
3)out of stock occasionally
buying groups/warehousing advantages
1)purchasing power of group lowers cost
2)improves discounts
buying groups/warehousing disadvantages
1)out of stock
2)some manufactureres and wholesalers won't offer them better deals
What are the advantages of using many vendors?
1)shop for best deals
2)obtain products during shortages
3)keeps vendors competitive w/ eachother
What is the definition of merchandising?
the proper display and placement of goods throughout a business
What is the word that describes the way pharmacies tend to place related departments near each other in an attempt to facilitate customers purchsing more items than they had originally intended?
What is the term used to describe displaying a particular item in more than one area in a pharmacy
What is the largest asset for most pharmacies, regardless of setting?
inventory (>50%)
What are examples of inventory storage carrying costs?
What are examples of inventory risk carrying costs?
4)lack of sales >>> price reductions
what is the definition of opportunity cost of capital in inventory carrying costs?
money a pharmacy could have made if their investment was not tied up in inventory
What are characteristics of pharmacies with high inventory turnover rations (ITO)?
1)higher sales
2)lower expenses as a % of sales
3)higher net profits
Term used to describe the time from when an order is placed until it is received and ready for sale
lead time
term used to describe the minimum required inventory level
safety stock
What are procurement costs?
1)cost of placing orders
2)cost of receiving and inspecting goods
3)cost of processing orders
4)cost of maintaining inventory records
What are carrying costs?
1)costs of inventory storage
2)cost of risk
3)opportunity cost
What is the formula for REORDER POINT?
(Usage Rate x Lead Time) + Safety Stock
What is the equation for economic order quantity?
square root of 2 x D x PC / ICC x UC

D=annual demand
PC=cost to place one order
ICC=inventory carryinhg costs
UC=unit cost of item
Levels of Data Processing:
What is transaction processing
1)deals w/ single transactions
What is a management information system?
1)groups single transactions into meaningful groups or sets
(pharmacy computer systems, accounting systems)
What is decision support?
computers provide info/support while transactiopns are occurring (DUR modules)
hat is artifical intelligence/expert systems?
1)computers programmed to make decisons based on rules and guidelines
What are the benefits of electronic prescribing to physicians?
1)easy access
2)immediate nofification of problems
3)no paper
4)automatically update info in medical record
What are the beneifts of electronic prescribing to pharmacists/pharmacies?
1)no deciphering
2)formulary/drug problems resolved b4 rx reaches pharmacy
3)less phone time
4)fewer adulteration opportunities
What are the benefits of electronic prescribing to patients?
1)rx sent to pharmacy of choice
2)less wait time
3)improved patient safety
What are 4 potential pitfalls of electronic prescribing?
1)standardization of technology
2)confidentiality/prescriver identification
3)willingness to adapt
What is an example of an automated dispensing system in community pharmacy?
ScriptPros SP 200
What is an example of telepharmacy
What are potential problems with virtual pharmacies?
2)unscrupulous sites
3)lack of physical relationship
Who regulates prescribing sites in virutal pharmacies?
1)both state pharmacy AND medical board
Who regulates pharmacy sites in virtual pharmacies?
1)state pharmacy boards
(similar to mail-order pharmacies)
The National Association of Boards of Pharmacy (NABP) has started a ______ accreditation program for virtual pharmacies
Does NABP regulate virtual pharmacies?
What are characteristics of Verified Internet Pharmacy Practice Sites (VIPPS)
1)legal/regulatory requirements
2)privacy criteria
3)authenticity and security
4)QA adherence
5)consultation provided
What are examples of pharmacies?
What are examples of "brick and click" pharmacies?
Walgreens, Osco, CVS,
What are examples of managed care and pharmacy benefitis managers (PBMs)
express scripts,
What is the definition of entrepreneurship?
process intended to create wealth through GATHERING and EFFICIENT MANAGEMENT of resources in order to pursue a BUSINESS OPPORTUNITY with acceptable levels of risk
What is the definition of intrapreneurhip?
the process of PROMOTING INNOVATION and STRATEGIC CHANGE within large organizations
Examples of intrapreneurship?
All of osco/supervalu pharmacists who have developed clinical services
Does entrepreneurship or intrapreneurship imply ownership?
What are advantages of ownership?
2)personal satisfication
3)family involvement
5)social contacts
What are the disadvantages of ownership?
1)risk of financial loss
2)lack of security
3)uncontrollable environment
4)time demands
5)impact on family life
What is the 1st step before purchasing a pharmacy-related business?
Assessing the market (creating a business plan)
1)what do customers need/want/afford
2)sales potential/competitive environment/demographic, social, cultural dimensions/potential market niches
What other professionals can help pharmacists make business purchase decisions?
1)other pharmacy related business owners
2)industry consultants
What are the advantages of starting a new business?
3)won't inherit ill will of previous customers, vendors, employees
What are the disadvantages of starting a new business?
1)requires ALOT of effort
2)requires ALOT of capital
3)years until normal salary
What are the advantages of purchasing an established business?
1)save time and costs
2)pre-existing customer base
3)less uncertainty
4)learn from previous owner
5)bargain prices
What are the disadvantages of purchasing an established pharmacy?
2)poor image of previous owner
3)outdated, insufficient physcial facilities
4)outdated, slow-moving inventory
5)misrepresentation makes price too high
6)responsibility w/o authority
What factors affect a pharmacy's value?
1)profit history
2)pharmacy condition
3)market demand
4)economic conditions
5)non-compete clause
6)future profit potential
What term is used to described a business owned and operated by one person (business is a legal extenstion of the owner and profits are taxed as personal income)
sole proprietorship
What are the advantages of sole proprietorship?
1)ease of starting
2)fewer legal restrictions
3)all profits belong to owner (no corporate taxes)
What are the disadvantages of sole proprietorship?
1)owner has UNLIMITED liability
2)difficult to raise additional capital
3)record keeping
What is the definition of a partnership?
1)business with more than 1 owner
2)legally organized to remove the owners from personal liability for business corporations, yet takes the owners as individuals
What is a general partnership?
all participants have an equal share in the operation and ownership of the business
What is a limited partnership?
one partner operates the business and others contribute capital but have limited liability
What are the advantages of partnerships?
1)easy to form
2)possible tax advantages
3)broaden management base
4)access to additional sources of capital
What are disadvantages of partnerships?
1)general partners still have UNLIMITED liability
2)divided authority
3)difficult to get money invested out
What is the definition of a corporation?
1)chartered by the state and legally operates as an entity SEPARATE from it's owners
What are the advantages of a corporation?
1)business' liability limited to value of assets
2)owner's liability limited to value of stock
3)continuous existence as owners come and go
4)ability to raise capital through many soruces (debt, equity)
What are the disadvantages of a corporation?
1)complicated and expensive to start
2)government restrictions and reporting requirments
3)corporate tax rates often higher
4)lack of secrecy and control

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