The stock movement report is designed to identify the total number of days an item has been inventoried. The result is typically called Stock Days. Stock days are calculated as the sum of stock available for a selected date range.
In order to calculate stock days we require a number of key variables:
- Opening stock count, that is the quantity on hand at the start of the selected period.
- Closing stock count being the quantity on hand on the last day of the selected period.
- Movements during the period, that is stock inwards and outward transaction.
Using an example item number WIDGET between 1/1/2012 and 1/2/2012, let’s assume the opening stock count is 10 units and NO MOVEMENT of stock occurred.
In this case the total stock days are simply 31 days * 10 Units to equal 310 Stock Days.
Now assume that on the 16th all 10 items where removed from inventory. Stock Days is now calculated as 15 days * 10 Units and 16 days * 0 Units which is now 150 Stock Days. The best way to grasp stock days is to imagine a bar chart as shown below where the stock days is the sum of stock on hand for each day in the selection period.
In this example the Total Stock Days from the 1st to the 22nd is 140 – this is calculated by adding the total stock on hand for each consecutive day. The AVERAGE stock on hand is calculated as the total stock days divide the number of days in the period – in this example 22 giving 6.36 Units.
Application of Stock Days
Typically Stock Days calculations are used to determine important inventory figures – for example the Average Stock Units on hand. Average Stock Units can assist in capacity planning, by knowing how many units a warehouse typically has on hand the warehouse manager can allocate sufficient floor or rack space.
Third party warehouses may choose to charge fees for the number of items stored in its warehouse based on the total time those units spend occupying space. In this case a Unit per day rate is multiplied by the Stock Days figure to give a total storage fee per item.
Lastly, the rate at which Stock is “turned over” can also be calculated using Average Stock Units and Units Despatched for the same period. By dividing these two quantities a determination can be made on how long it will take to clear out the product from stock.
For example if the period selected is 10 days, the average stock holding is 10 units, and 5 units are despatched in the period the stock turn figure will be 0.5 which means stock will take 20 days (Total Days in period/turn ratio) to turn over current inventory holdings. By reviewing stock turn days the warehouse manager can fine tune purchasing to manage demand and avoid stock outs.
Using the Datapel Stock Movement Report
Here are some tips and tricks to get the best use from the Datapel Stock Movement report.
Tip#1 – Always choose a selection of items and restrict the date range, avoid running the report for long date ranges. This report is computationally intensive and can slow down your system if you select too many items over a long date period.
Tip#2 – Date range MUST BE at least ONE FULL DAY and does not include stock holding for the closing date. The ENDING DATE is NOT INCLUDED in the calculation for Stock Days therefore to calculate a months Stock Days for an item you should choose the 1st of the Start Month to the 1st of the NEXT MONTH.
NEVER select the SAME DAY as beginning and end date – this will NOT return a movement result.
Tip#3 – Inventory Turn Days is 0 when there is no OUTWARD stock movement – effectively this means you will never clear the inventory given the stock movement patterns in the selected date range.
Tip#4 – Turn Ratio Values will vary depending on the date range you select and the movement activity of the item for that period. In general a stock turn of > 1 indicates the product is FAST MOVING and you may need to increase supply. Around 1 indicates your stock will turn over within the selected date period, and the closer to ZERO the SLOWER the stock is moving.