How much stock to carry?

The aim of a business is to maintain stock at optimum levels. (Not minimum, but optimum!) This is determined by a range of factors:

  • The image of the store

Often not considered, especially by the accountants, but sometimes the right quantity might be very ‘minimalist’ – simply because that is the store image, It is not always about productivity.

  • The expectations of the customers

This is closely related to store image.

  • Cash resources/the line of credit available

Need I say more? Except that if this becomes a constraint or issue that prevents you from executing your strategy and your brand promise, then it must fixed quickly.

  • Product features

Some products store well and others don’t. The obvious ‘features’ that apply is fashion and perishable items, but it is very hard to predict the peak a faddish seller, so it is also particularly difficult to select order quantities.

And it goes without saying that retailers are also constrained by:

  • Space available

  • Lead times

  • Supplier policies