![]() ![]() ![]() Then, you can use the formula summed up by Accounting Coach : the square root of in order to find your economic order quantity Managing Inventory With an Inventory Control SystemĪn inventory control system is a computerized solution that brings all aspects of inventory management into one cohesive system. You’ll need to know your annual fixed costs, demand in units, and carrying costs per unit (H) in order to calculate this. Economic Order Quantity (EOQ)įinally, EOQ is the optimum inventory you should purchase to minimize the costs of ordering and holding. Calculating this means adding together your lead time demand in days and safety stock in days.īasically, reorder point = lead time demand + safety stock. The reorder point is a way of controlling inventory that determines the right time to order more stock. Start with an initial stocktake, and then use the right inventory tracking system to keep track of movements and levels. An organized inventory system begins by labeling your stock with SKUs that are easily understandable and simple to read. It may seem like a simple concept, but it does make a difference to have your stock meticulously organized with a stock control process. Once you have your suppliers, batch tracking ensures your stock consistently meets your highest quality standards. When you work with a supplier that has the same quality standards as you do, over time, you develop a long-term relationship. Quality control is an essential part of inventory control, and the processes you use have a dramatic impact. Let’s take a look at what some of these essential inventory control processes are, and why they're important for companies today. Over time, different inventory control processes and formulas were created in order to help companies with the complexity that is inventory control. Important Inventory Control Processes and Formulas As a result, finding ways to manage inventory efficiently can significantly impact an organization’s bottom line. Note: According to Investopedia, inventory is usually one of the largest current assets appearing on a business’ balance sheet. ![]()
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