Lab Finance, Budgets, and Inventory

What is a Budget? A financial report containing estimates of incomes and expenses A plan for coordinating income and expenses

Budget Process Budget Phases Phase I Development of Goals Phase II Budget Assumptions Phase III Forecast of Expenses Phase IV Monitoring

Phase I: Development of Goals Hospital Initiatives Reduce supply expense Increase testing volume Department Initiatives Buy a new analyser Paint the department

Phase II: Budget Assumptions Past Earnings (revenue) Past Volume Past Expenses Salaries Supplies Other

Phase III: Forecast Planned Earnings (revenue) Planned Volume Planned Expenses Salaries Supplies Other

Direct vs. Indirect Costs Direct Costs – costs that directly impact the budget Indirect Cost – costs that do not directly impact the budget

Fixed vs. Variable Cost Fixed Cost – Amount of expense remains constant Car payment Rent Variable Cost – Amount of expense changes Salaries Supplies

Capitol Expense An investment to acquire or improve an asset, usually over a defined dollar amount Buildings/Land New equipment Renovations Expensed over a period of time (depreciation)

Phase IV: Monitor Review monthly for variances Explain any variances from budget Make adjustments

Storeroom Management Inventory Flows FIFO – First in, First out LIFO – Last in, First out

Inventory Management Set Min/Max Levels Minimum amount of inventory on hand Also called, reorder level Based on lead time – shipping time Maximum amount of inventory on hand Eliminate expired supplies Reduce inventory expense

Min/Max Pipette Tips Min – 3 boxes Max – 11 boxes Use 2 boxes per week Ship time is 1 week Order one time per month 1 box buffer Max (2x4) +2+1=11 Min 2+1=3

Min/Max? Pipette Tips Min – 4 boxes Max – 16 boxes Use 3 boxes per week Ship time is 1 week Order 1 time per month One box buffer Max (3x4)+3+1=16 boxes Min 3+1=4 boxes