How much stock to buy?

[oliverstoychest]

Hello fellow retailers! I'm currently in the process of restocking my retail shop, and I'm wondering how you determine the ideal quantity of stock to purchase. Do you have a specific approach in mind or do you rely on guesswork?


Do you analyze previous sales data to estimate the amount of stock needed? If so, how far back do you typically look, and what factors do you take into account when making projections?


Do you aim to maintain a certain number of weeks' worth of stock? If yes, how do you determine the optimal number of weeks to cover and what factors do you consider when setting this target? Obviously so you don’t sell out, do you have a minimum level you set before ordering ?


I’m just intrigued by how everyone decides.

 

[Lucan Unlordly]

How have you stocked it in the past?

How long have you been in business?

 

[oliverstoychest]

How have you stocked it in the past?

How long have you been in business?

I’ve been a while in business. Normally I look at the average we sell over a week, then buy three or five weeks worth subject to the supplier. As I say just intrigued by others

 

[MOIC]

Product, finance, space, supplier terms, supplier stock availability, shelf life (if applicable), turnover rate, supplier discounts, seasonal trade, sale periods, cash flow, buying locally, buying from an importer, importing yourself . . . . plus many more factors should guide you as to how much stock to order.

 

[MBE2017]

Differs depending on the item, but generally easily available stock which I knew I could obtain within a couple of days, I would look to stock a minimum of two weeks sales, for essential basics I might increase that to eight weeks worth.

For harder to source items I like to keep 1-2 months stock. To answer simply, I normally decide on a minimum and maximum level, taking into account carriage paid minimums etc from manufacturers. Set up on a computer, it’s not hard to set an alert when such minimums are reached. I am lucky to have a good memory, and seem able to keep an idea of the amount sold across many products in my head, which is a great help.

The only exception I have is to win market share, new clients etc, sometimes increasing stock is necessary before orders are obtained, but experience tends to guide myself. I wanted a new large account of a competitor, and the main stumbling block was too low a stock level.

I put in an extra £125k and invited them to visit, they liked that my company had taken their concerns into account, and started using myself straight away. I increased that initial stock by £300k within a month, which was a large commitment but that single account paid all the bills. Fortunately the stock was universally in demand across all accounts, so it would have sold quickly either way.

Set a stock control system up asap, it should save you fortunes and also make you good sales.

 

[japancool]

For me, right now, anything I can get hold of, and as much as is reasonably possible, up to certain limits. Limits being based on how popular an item is.

 

[oliverstoychest]

Differs depending on the item, but generally easily available stock which I knew I could obtain within a couple of days, I would look to stock a minimum of two weeks sales, for essential basics I might increase that to eight weeks worth.

For harder to source items I like to keep 1-2 months stock. To answer simply, I normally decide on a minimum and maximum level, taking into account carriage paid minimums etc from manufacturers. Set up on a computer, it’s not hard to set an alert when such minimums are reached. I am lucky to have a good memory, and seem able to keep an idea of the amount sold across many products in my head, which is a great help.

The only exception I have is to win market share, new clients etc, sometimes increasing stock is necessary before orders are obtained, but experience tends to guide myself. I wanted a new large account of a competitor, and the main stumbling block was too low a stock level.

I put in an extra £125k and invited them to visit, they liked that my company had taken their concerns into account, and started using myself straight away. I increased that initial stock by £300k within a month, which was a large commitment but that single account paid all the bills. Fortunately the stock was universally in demand across all accounts, so it would have sold quickly either way.

Set a stock control system up asap, it should save you fortunes and also make you good sales.

Thank you. Found this one very useful ?

 

[Daybooks]

There are a number of management accounting techniques that can be used such as Economic order quantity, minimum and maximum stock levels, free stock, buffer stock and re-order levels.

The CIMA Official Terminology booklet is good for defining them and giving meaning and context.