UNIT 5

INVENTORY
ANALYSIS
• Deliberate and explain the
goals of inventory analysis
• Demonstrate ABC Analysis
• Conduct inventory analysis
using metrics
INVENTORY
ANALYSIS
Inventory analysis is the regular
auditing of inventory in the pursuit of
continuous improvements to how it is
managed. This can be done through a
variety of commonly used inventory
KPIs and ratios.
THE GOALS OF
INVENTORY ANALYSIS
IDENTIFY IMPROVEMENT AREAS-
metrics should be compare to past results.
REDUCE STOCK-OUTS- should be seen as a
huge red flags for retailers.
IMPROVE CASH FLOW- prevent sinking too
much cash into stock.
WASTE LESS INVENTORY- minimize
inventory shrinkage, such as stock that gets lost.
ABC ANALYSIS
Commonly used inventory
analysis method that helps
to identify your most
valuable inventory.
 INVENTORY ANALYSIS METRICS

• AVERAGE INVENTORY
-measures the average
volume of inventory kept on-
hand throughout a given
period.
 INVENTORY ANALYSIS METRICS
• INVENTORY TURNOVER
-measures how many times
your inventory is sold over a
given time period.
This is affected by two key
factors:
1. Purchasing
2. Sales
INVENTORY ANALYSIS METRICS

• INVENTORY WRITE-OFF
-measure of any unsold
inventory that has become defunct or
no longer has any value for the
business over a given period.
 INVENTORY ANALYSIS METRICS
• GROSS MARGIN RETURN
ON INVESTMENT
(GMROI)
-simple ratio to measure the
profitability of your inventory
over a certain period.
 INVENTORY ANALYSIS METRICS
• SELL THROUGH RATE
-takes the amount of
inventory a retailer receives, and
compares it against what is
actually sold over a given
period.
 INVENTORY ANALYSIS METRICS
• DAYS INVENTORY
OUTSTANDING (DOI)
-simply how many days it
typically takes to create or buy
inventory and turn it into a sale.
 INVENTORY ANALYSIS METRICS
• BACK ORDER RATE
-shows the percentage of
your total orders over a given
period that ended up being
placed on back order.
CONDUCTING
INVENTORY
ANALYSIS
FROM SALES:
TO PRODUCTS AND INVENTORY:
Therefore, Inventory Analysis is an
important aspect of managing any
business, as it allows companies to
keep track their stock levels and
ensure that they have enough
products on hand to meet customer
demand.
THANK YOU!
ATIENZA, Aira Mae L.
CAYABYAB, Claire R.
DAQUIZ, Cyrill B.
FAJILAN, Maricris F.
OCAMPO, Liyannah Clyne T.
OM3A