1. ABC inventory analysis is a method used to classify a business’s stock items into three categories – A, B and C, based on their value to the business.
2. A items are the most important in terms of the value they bring a company, whilst C items are the least valuable.
3. ABC inventory analysis is important as it helps managers focus their time on their most valuable / important products and adapt their inventory control policies accordingly.
1. A sales forecast is a prediction of future sales revenue. Sales forecasts are usually based on historical data, industry trends, and the status of the current sales pipeline. Businesses use the sales forecast to estimate weekly, monthly, quarterly, and annual sales totals.
2. New businesses that don’t have much data about their own sales process may need to rely on industry averages or even educated guesses. On the other hand, more established companies can use their historical data to model future performance.
1. Inventory demand forecasting is the process of predicting customer demand for an inventory item over a defined period of time.
2. Accurate inventory demand forecasting enables a company to hold the right amount of stock without over or under-stocking, for optimum inventory control.
3. Historical data trends and market knowledge of how demand can fluctuate are often used to forecast inventory demand.
4. Forecasting inventory can be as basic or as complex as you make it.
5. As a simple rule, the more sophisticated your inventory forecasting techniques, the more accurate your predictions will be.
6. Accurate demand forecasts allow you to efficiently serve customers’ needs without investing capital in large amounts in stock, effectively helping you lower your overall operational costs.
7. However, inventory forecasting can be challenging to undertake without the right guidance, so starting with basic forecasting techniques is advisable.
1. There are many ways to forecast business trends and all of them fall under two extensive categories like qualitative & quantitative. Let’s discover more about these models: