![]() ![]() That’s exactly what EOQ does: tell you the number of units you should order at one time. After you know your turnover and the right time to create the next purchase order, the next step is to figure out how many items you should order. Learn more about the reorder point calculatorĬ) Economic Order Quantity (EOQ) is a good way to follow up the previous two calculators. This tool gives you a good idea of when you should place your next purchase, so you don’t run out of stock or order too many items and increase your holding cost. Find your inventory turnover ratio hereī) Reorder point formula is based on your material usage and the number of days it takes for items to reach your store or warehouse after you have created a purchase order with your vendor. This tool can help you decide your future strategy based on your past year trends, and it also allows you to compare your ratio with the standard for your industry. Each of these tools concentrates on a different area of order management.Ī) Inventory turnover ratio gives you an idea of how many days it takes for your items to turn into sales. To give you an example, if your inventory turnover ratio is 10 then, it takes you on an average, 36.5 days (365/10) to turnover your inventory. This means that you’re either ordering too many items at once, or ordering them at the wrong time. Simple calculations like Reorder Point, Economic Order Quantity (EOQ), and Inventory Turnover Ratio can help you to follow a more effective schedule for ordering items from your vendors. There can be a lot of reasons for dead stock, but most of them fall into three categories: 1. Ordering inconsistencies If you are constantly dealing with dead stock and can’t figure out how to avoid it, give this a read. However, dead stock is common for trading businesses. The amount spent on buying the items from your vendor can only be recovered when they are sold, so stock that isn’t selling represents lost money. Dead stock is detrimental to any business, because it not only takes up valuable space but also acts as a bad investment for your company. Reading Time: 5 minutes What is dead stock?ĭead stock refers to any unsold items which are lying in your warehouse or your store for a long time. ![]()
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