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Inventory Turnover Analysis Definition.

former_member419030
Active Participant
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Dear Experts,

I have been searching trough the forum, but could not get the correct explanation for the Inventory Turnover Analysis (Under inventory Menu)

1) I understand that this report will help user to manage the inventory, example to decide to increase/ decrease the quantity during purchase based on this report

2) Is the Period Good Issue Qty, Days of stock taking, and Next Reorder Point is always negative? May I know why?

3) Period Good Issue Qty = qty of inventory moving OUT within the selected date range

What is Days of Stock Taking and Next Reorder Point?

I managed to understand the calculation, but could understand, what is exactly the meaning of these two

4) How to calculate the turnover analysis? Is it correct to have positive figure is good?

Thank you in advance.

former_member419030
Active Participant
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Dear Experts,

Any opinion on this issue?

Accepted Solutions (0)

Answers (3)

Answers (3)

kothandaraman_nagarajan
Active Contributor

Hi,

Here answers for your questions,

  • Opening Inventory: Opening balance before the From date.
  • Closing Inventory: Sum of (Received Qty - Issued Qty) in the time period.
  • Period Goods Issue Qty: Issued quantity within the time period.
  • Days in the Period: Number of days between the From and To date. This can be also calculated by running the following SQL query:
    • SELECT DATEDIFF(day,'2017-02-01','2017-02-28') AS DiffDate -- If for example the dates are from 2017-02-01 to 2017-02-28.
  • Days of Inventory = [(Opening Inventory + Closing Inventory) / 2 / Issued Qty] * [(1 + Days in the Period)]
  • Next Reorder Point =[(OnHand Qty - Min Inventory) / Issued Qty] * [(1 + Days in the Period) - Lead Time]
  • Min. Inventory: Minimum inventory level set in Item Master Data
  • Lead Time: Lead Time set in Item Master Data

Regards,

Nagarajan

former_member419030
Active Participant
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Dear Nagarajan,

Thank you for the answer. Really appreciate it.

Im still having problem to understand the Next Reorder Point and Days of Inventory.

What are actually these two means for? For what purpose we calculate it?

Thank you in advance.

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Dear Nagarajan,

Can you please post the formula for the Inventory TurnOver field? it's missing from the list you posted above.

I understand that the logic is COGS / Avrg Inventory. but where is the system getting this values? If I run the report from 1/1/20 til 12/31/20 is the COGS current value? and avrg inventory same question. How is the system getting this value to end up with a Inventory Turnover ratio Total of 1.16 from the Pic below.

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It's not allowing me to upload a pic... so here is the info

Opening Inventory: 9,432.00

Closing Inventory: 5,232.00

Period Goods Issue Qty: 8,520.00

Days of Inventory: 314.97

Inventory Turnover: 1.16

Min: 0.00

Lead Time: 90

Next reorder Point: 135.01

Last Receipt date: 06/22/20

kothandaraman_nagarajan
Active Contributor
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Hi,

Create few transactions in test environment to understand the definitions.

Regards,

Nagarajan

former_member419030
Active Participant
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Dear Nagarajan,

Thank you for your suggestion.

I did a few testing to test why the value inside this report always negative.

First, i thought because this item involve Down Payment transaction which user make payment first even the current stock is not enough. I did create a few new item and do transaction without down payment, the value is still negative.

Then I open the Crystal Report designer, to see the back end formula for this report, I can see that the negative started from the period good issue qty, which the value captured from table {Inventory.IssueQty}. This value is always negative as indicate the item OUT from the inventory. Then, this IssueQty used in most of the formula to get days in the period, turnover value, etc..I guess, this is why the report always appear in negative. Am I right?

Thank you.

Abdul
Active Contributor
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former_member419030
Active Participant
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Dear Abdul Mannan,

Thank you for your response.

May I know, what is the definition of Next Reorder Point and Days of Inventory?