Business & Practice Management

You Asked: How Much Inventory Should I Have? How Do I Keep Track of It? And What Do I Include?

In the latest Money Matters, we go deep on inventory management.

Published

2 weeks ago

September 4, 2024

Nathan Taylor and Wade Weisz, OD Invision September 2024 Issue

You Asked: How Much Inventory Should I Have? How Do I Keep Track of It? And What Do I Include?

PHOTO: ISTOCKPHOTO

YOU ASKED: How do I determine how much inventory I should have? How do I calculate beginning and ending inventory?

WE ANSWER: Determining the right amount of inventory is crucial for the financial health of an eyecare practice. Here’s a step-by-step approach:

How Much Inventory You Should Have?

1. Analyze Sales Data: Look at past sales to predict future trends. This will help you estimate how many frames, lenses, and other optical supplies you’ll likely need.

2. Consider Lead Times: Factor in the time for receiving products from suppliers to help ensure you have enough on hand to meet customer demand without overstocking.

3. Adjust for Seasonality and Trends: Adjust levels based on seasonal trends and changes in consumer preferences.

4. Use Inventory Turnover Ratios: Calculate how often your inventory is sold and replaced over a period. A higher turnover rate typically indicates efficient inventory management, reducing holding costs.

Beginning Inventory is the recorded inventory value at the start of an accounting period. Ending Inventory is calculated at the end of the accounting period. It can be determined through a physical count or by using an inventory management system

TIPS

Implement an Inventory Management System. This software tracks inventory levels, sales, and deliveries in real-time. Conducting a physical inventory check is essential to verify inventory records and adjust for discrepancies like theft, loss, or damage.
Regular Reviews. Regularly review inventory performance, identifying slow-moving items.
Educate Staff. Train your staff on the importance of inventory management and the systems you use.

Nathan Taylor and Wade Weisz, OD

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