Inventory Management Made Easy: Inventory Levels

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If you are in any way concerned with inventory management, you are bound to have heard the term Inventory level. Whether you use any inventory management software or handle your inventory manually, maintaining correct inventory levels is the basic step for successful inventory management.

So what is inventory level?


The Inventory level is the number of items you keep in your store or warehouse to sell or stock up for selling later. This means, whenever a customer visits your store you should be able to provide the required item in the required quantity and avoid missed sales.


Now the question arises, how retailers can determine the right inventory level?


Inventory Management Made Easy: Inventory Levels

The answer to this question in simple words is, you need to keep track of the following:
• Your average daily sales
• Your supply cycle (when your supplier delivers the stock)

For example, if the daily sale of a particular item is 20 units and your supplier delivers stock after one week you will require 35 units for seven days. And if your safety stock is 15 units for the item in question, the correct inventory level for the item will be 50 units for one week.

Maintaining proper inventory levels is also important for running multi-chain store retail business. Optimum inventory level management helps you distribute stock to all the retail outlets according to the inventory level of each store. This makes stock distribution easier.

Now the sales will not remain static. They can, and will, increase or decrease; the challenge is to keep track of the changes and maintain optimum inventory levels to avoid both understocking and overstocking. If you are using good inventory management software, you can easily track daily and weekly sales and prepare your purchase orders accordingly. If you are maintaining inventory levels without the help of any software, you need to be extra careful and regularly change the inventory levels according to the customers’ demand and sales forecasts.

Whatever method you use, make sure to maintain required inventory levels in your store, this is one of the sure-shot methods to increase sales, as this can increase the probability of avoiding missed sales. Thus we have seen that with the help of inventory levels we can increase sales, because whatever the customer demands the probability increase that we will have it in our stock. And, moreover, you can also save money by avoiding void overstocking.

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