Qrb 501

Inventory Systems: GlaxoSmithKline
Harry Smith
September 20, 2011
Amanuel Gobena

Inventory Systems: GlaxoSmithKline
GlaxoSmithKline (GSK) is the world’s third largest pharmaceutical manufacturing company of over-the-counter and prescription medications, vaccines, oral health care products, and nutritional drinks. Common products manufactured by GSK are the H1N1 flu vaccine, Zantac, Paxil, Wellbutrin, Sensodyne, Crest toothpaste, Nicoderm patch, and boost energy drink, (GSK Annual Report, 2010). Last year’s sales reported growth margin up 4.5% at $48 billion; common products and medications used by consumers globally (e.g. H1N1 flu vaccine, Nicoderm patch, Zantac) contributed to GSK’s top   sales. Currently, GSK has over 90,000 employees and operates worldwide. GSK is headquartered in Brentford, United Kingdom, (GSK Annual Report, 2010). GSK’s annual reporting of its net sales, gross profit margin, capital gain and loss is reported on a quarterly and annual basis to its stakeholders (e.g. shareholders, investors, board of directors, and the public) via its financial statements in December.
In this paper the subject discussed will be GSK’s use of first in, first out, (or FIFO) inventory system, advantage, and disadvantage of using FIFO inventory system. This paper will also examine and display collected winter and summer historical inventory data in the attached report (Appendix A).
First in, First out Inventory System
GSK use a mix of inventory systems: Bar code for tracking and shipping product and first in, first out (FIFO) for accounting, tracking, and reporting sales, sales loss, and net profit gain. As reported on GSK financial statement, the cost to manufacture goods (e.g. raw materials, direct labor, and other overhead cost) plus net realizable value plus assets, such as, pre-launch product (medications awaiting FDA approval) are held as assets and listed under the asset column of the financial statement. Once approved by the FDA and...