How Much Stock Should i Hold as Good Rule of thumb

[JONAZAX1717]

Hi, hope you are well, I run a small bespoke sports equipment business within the UK , In previous Years i have been online ecommerce online , and have always aimed to cleared 95-100% of stock in a 12 month peroid and have done it succesfully , e.g last year we have 25k invested and cleared all in a year, however we are aiming to grow and have opened up a new showroom w, so stock has jumped from 25 to 46k , as people can come in store , would you say a good rule of thumb is 80-90% within a 12 month peroid , as people can now come in store i understand , we cant really be at 100% as we wont have anything to sell, just need some advice and a good rule of thumb, business is seasonal, any advice greatly apperciated.

 

[DontAsk]

Clearly, you need to hold enough stock so that you don't sell out before you can get more.

There's no magic time period. It depends on the quantity you buy and how fast they sell. Buy smaller lots more often, tying up less capital, or buy large lots less often, tying up more capital. The answer will be different for different items, e.g., how does the purchase price vary with quantity? What does it cost to store the stock? Not just actual storage costs but loss of opportunity due to capital tied up in stock.

Etc., etc., etc., ...

Just do whatever you are happy with.

 

[neilsolaris]

This is what I learnt when I studied ACCA.

Inventory control

Read more about inventory control

www.accaglobal.com

 

[HFE Signs]

I think the answer is a combination of speed/quantity of sales and lead time to re-stock. All stock comes with an element of risk too so don't over-stock

 

[pentel]

A stock turnover of 1 is very low. Most retail of non perishables is around 2-4.

 

[Paul Kelly ICHYB]

Running B&M is different to online as you need to consider having stock to display, which can automatically increase the investment, so doubling the stock in actually quite low!

You also need to take into consideration your supplies - can you order one off's or do you order in inners/outers. If you order from abroad, the volumes might be bigger!

The important things are:
Always keep the sellers in stock.
Clear the dead stock quickly.

 

[Ivel]

How long does it take you to make a new order and receive it? It is better to place multiple orders throughout the year so you don't tie up a lot of working capital and not run out of stock at the same time. It really depends on the supply time, but I would think you should hold enough for 2-3 months of sales.