what is best model setup to calculate inventory turnover?

[Chris_Cools]

Hello,

what is the best approach for a model to be able to calculate inventory turnover?

Do i create a stock table where each month a "snapshot" of the end inventory is added?

Or better to use a stock table where stockmovements are logged?

And what might be up or downsides for each option?

Or is there another better way to do this?

Kind regards,

Chris

[Sahir_Maharaj · Accepted solution]

Hello @Chris_Cools,

Ultimately, the best approach depends on your specific needs, data volume, and the level of detail required. If you need a simple, high-level overview of inventory turnover over time, the snapshot table approach may be sufficient. If you require more detailed and real-time analysis, the stock movements table approach might be a better fit. It's essential to consider the trade-offs between simplicity and detail when making your decision.

1. Snapshot Table Approach: In this approach, you create a stock table with a snapshot of the end inventory for each month. This table will have a record for each product at the end of each month, with the corresponding quantity in stock. To calculate inventory turnover, you can use the average of the beginning and ending inventory quantities for each month.

Upsides:

• Simple and easy to understand.
• Good for historical analysis and comparisons.
• Allows for straightforward filtering and aggregations.

Downsides:

• Requires regular updates for each month's snapshot, which can be time-consuming for large inventories.
• Does not capture individual stock movements, which might be important for analyzing trends or specific events.

2. Stock Movements Table Approach: In this approach, you create a stock movements table where you log every stock movement for each product. This table will include records for each addition and reduction in inventory quantity with timestamps. To calculate inventory turnover, you can sum the quantities for sales and divide it by the average of the beginning and ending inventory quantities for a specific time period.

Upsides:

• Captures detailed stock movements, allowing for more granular analysis.
• More suitable for real-time or near real-time reporting.
• Can be used for other inventory-related analyses, like detecting slow-moving or fast-moving items.

Downsides:

• More complex to implement and manage, especially if you have a large number of products and frequent stock movements.
• Requires proper data management to ensure data integrity and accuracy.

Should you require further assistance please do not hesitate to reach out to me.

[Chris_Cools]

Thank you very much!

i think i'll start with the snapshot table approach since i have that data per month for the last 5 years.

(this is partly automated so does not take more than 5 minutes to integrate in the larger snapshot table)

And next to that i'll try the 2nd option also to see if i can make it work and if so drop the work of gathering the montly data.

thanx a lot!

Kind regards,

Chris