Determining the value and quantity of inventory that sees infrequent sales is crucial for effective inventory management. For example, analyzing sales data over a specific period, perhaps a year, can identify items with low turnover rates. This analysis often involves comparing the quantity of each item sold against the quantity held in stock. This process helps businesses understand the financial impact of holding onto these items.
Managing inventory with low turnover is essential for maintaining a healthy financial position. Accurately assessing this type of inventory allows businesses to optimize storage space, minimize losses from obsolescence or spoilage, and free up capital tied up in unproductive assets. Historically, this analysis has been performed manually, but modern inventory management software and advanced analytics now offer more efficient and accurate methods. This evolution has enabled more proactive and data-driven decision-making regarding inventory control.
