The two-compartment model for intravenous (IV) bolus administration illustrates drug distribution in the body, subdividing it into central and peripheral compartments. This model operates on the concept of two-compartment kinetics. The drug's plasma concentration shows a bi-exponential decline following IV bolus administration, signaling the presence of two disposition processes: distribution and elimination.

The disparity between drug input and the sum of drug transfer rates between compartments and elimination determines the rate of change in drug concentration. The transfer constants k₁₂ and k₂₁ depict the rate at which the drug moves between these compartments.

The method of residuals is employed to estimate these transfer constants and other pharmacokinetic parameters. In this method, the slope of the residual line provides the elimination rate constant (k). From k, we can calculate the elimination half-life (t_1/2). Other essential pharmacokinetic parameters like the volume of distribution (V_d) and clearance (Cl) can also be determined using suitable equations. All these parameters help in understanding the behavior of the drug within the body.