Inventory turns define how often you would like to replenish the products on the shelves and measure how hard your inventory investment is working.
There is no exact formula on what is the best turn rate. The higher the gross margin on products, the less important it is to obtain a high inventory turn rate. If a product has a low margin, you will want to turnover that product as often as possible and keep stock as low as possible, without running out of it.
Purchasing in bulk requires a greater investment that can place a heavy burden on your business and can cause you to miss incentives offered by your distributor. Discovering the actual turn rates of the products in your inventory allows you to make better buying decisions.
The Inventory Turns Wizard calculates the actual turn rate for each product as follows:
Turn Rate = Quantity of Products Sold / Average Model Quantity
Once you know the actual turn rate of each product, you can specify a desired turn rate for each product. The Inventory Turns Wizard then calculates the optimal model quantity for each product so you can maximize profits and do more with your investment.
The Inventory Turns Wizard displays.
Select Retail to analyze retail items or select Supply to analyze professional supplies.
Select Include Discontinued to include deactivated products in the analysis.
In the Distributor field, select a distributor to analyze products supplied by that distributor.
In the Manufacturer field, select a manufacturer to analyze products made by that manufacturer.
In the Class field, select a product class to analyze the products in that product class.
A list of products matching the specified criteria displays.
Tip: When you adjust the entry in the Desired Turn Rate field, the value in the Optimal Model Quantity field changes accordingly.