The Consumption Method: A Step-by-Step Guide
Use when: a product is established, records are complete and supply has been largely uninterrupted.
Setting up the assumptions
- Data: 12–24 months of monthly consumption, with stock-out days recorded.
- Stock-outs: exclude stock-out months from the average.
- Reporting: scale up if not all facilities reported (e.g. ÷ 0.9 for 90%).
- Expected change: programme growth, new services or policy changes (%).
- Seasonality: reflect systematic monthly variation.
- Planning parameters: lead time, procurement period and safety stock, in months.
Procedure
- Adjusted average monthly consumption = consumption in months with stock ÷ number of those months.
- Adjust for reporting rate and expected change.
- Requirement = projected monthly consumption × (lead time + procurement period).
- Safety stock = projected monthly consumption × safety stock months.
- Quantity to procure = requirement + safety stock − stock on hand − stock on order.
- Round up to packs, cost and compare with the budget.
Worked example
A district store is quantifying metformin 500 mg tablets for 12 months. The product was out of stock in March and April.
| Month | Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Consumption (tablets) | 4,600 | 4,900 | 0 | 0 | 5,100 | 4,700 | 4,800 | 4,500 | 5,000 | 4,900 | 4,700 | 4,800 |
Assumptions: March and April excluded; +10% for a new diabetes clinic; lead time 3 months; procurement period 12 months; safety stock 3 months; stock on hand 9,000; stock on order 6,000; packs of 1,000.
| Step | Calculation | Result |
|---|---|---|
| Adjusted average monthly consumption | 48,000 ÷ 10 months | 4,800 tablets |
| Projected monthly consumption | 4,800 × 1.10 | 5,280 tablets |
| Requirement | 5,280 × (3 + 12) | 79,200 tablets |
| Safety stock | 5,280 × 3 | 15,840 tablets |
| Quantity to procure | 79,200 + 15,840 − 9,000 − 6,000 | 80,040 tablets |
| Rounded to packs | 80,040 ÷ 1,000, rounded up | 81 packs |
Including the stock-out months would give an average of 4,000 and understate the order by about one-sixth.
Key considerations
- Unadjusted stock-outs lead to repeated under-ordering.
- Issues data are not the same as consumption.
- Plan one-off campaigns separately.
- Count only usable stock on hand.
- Not suitable for new products.
Based on the online course on forecasting and quantifying medicines and health products offered by i+academy; all credit belongs to the course and its facilitators. For a fuller understanding, enrol in the course on i+academy.
Other guides in this series: Morbidity method · Demographic method · Other methods