If you are in the business of selling products, you most likely will carry some sort of inventory. Inventory management it crucial to cost savings and running an efficient business. One of the worst things that can happen is continually wasting inventory, it is just cash out the door.
Inventory can be one of the biggest expenses for a company. The goal is to use up 100% of inventory.
Inventory is an asset of your business but too high inventory and you are wasting money. Too low and customer has to wait for item to come in and may go somewhere else.
You will need to manage on-hand quantities to ensure you have enough to do business but only keep the minimum you need to do business. This reduces costs and takes up less space. The amount of inventory depends on customer demand for your products.
You should keep good records of all items and once you have built up a history you can get a good idea of how much you will need. Watch for trends throughout the year.
You should know your inventory turnover rate. Depending on your industry it could be a few or several times per year. Food items are perishable and must have a higher turnover. Luxury items on the other hand most likely will have a lower turnover.