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What Is Inventory Forecasting

To avoid running out of stock of the products you sell, it's important to use inventory forecasting when building an inventory control strategy. <br><br>Learn everything about inventory forecasting from industry veterans.

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What Is Inventory Forecasting

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  1. INVENTORY FORECASTING For small business (Wholesalers, Distributors, eCommerce Sellers)

  2. You must surely know the story of Goldilocks and the Three Bears?

  3. Wait

  4. What has this got to do with inventory forecasting?

  5. The Goldilocks Principle of having something that is not too hot and not too cold has been used for everything from the search for habitable Earth-like planets to inventory management, and of course, the perfect porridge temperature

  6. Check that your inventory turnover is within industry benchmarks 1 Use the popular Reorder Point formula to get a reliable reorder point for your goods 2

  7. Are You Selling Goods As Fast As They Are Stocked?

  8. What exactly is INVENTORY TURNOVER?

  9. Simply put, inventory turnover is how fast you sell your inventory and the need to replenish it

  10. Sales ÷ Inventory Measured over a period of one year

  11. Higher Isn’t Necessarily Better

  12. A high number means that you’re not stocking enough quantity of an item

  13. To fix this, you need to raise your inventory levels and lower your turnover so that you don’t miss out on any sales

  14. How Do I Determine My Optimal Reorder Point?

  15. A reorder point is the level of inventory that triggers an action to replenish stock

  16. A popular reorder point formula is as follows Reorder Point = Lead Time Demand + Safety Stock

  17. What Is Lead Time Demand?

  18. Expressed as a formula Lead Time Demand = Lead Time x Average Daily Sales

  19. Lead time is the time it takes from the issue of a purchase order to your supplier to the time it arrives in your warehouse

  20. What Is Safety Stock?

  21. Safety stock is not the stuff that you purchase in the event of a cataclastic disaster

  22. Use this simple one that should suit most small and medium-sized businesses Safety Stock = 1.65 x Square Root of Lead Time Demand

  23. Let’s Summarise All This

  24. 3 3 1 1 Lead time. It takes 30 days to receive a new batch of limited edition teddy bears from the factory 2 2 Hence lead time demand = 8 x 30 = 240 teddy bears Average daily sales. You sell an average of 8 teddy bears a day at your store. 5 5 4 4 Hence, your reorder point would be 240 + 10 = 250 Safety stock. They come in a compact, stackable box. So you like to keep 10 teddy bears as a buffer in your secret storeroom

  25. Finally, use an intelligent, cloud-based inventory management system liked EMERGE App Average daily sales Lead time for purchases Inventory levels for your products

  26. READ MORE https://emergeapp.net/inventory- reports/inventory-forecasting/

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