An automated template to calculate Inventory forecast based on Inventory turnover

This tool helps you to accurately forecast inventory and procurement spend based on COGS and Turnover ratio. The tool is fully automated.

The Excel template serves a threefold purpose with regards to inventory management. Firstly, it enables the user to forecast inventory levels based on the Cost of Goods Sold (COGS) and inventory turnover. By inputting relevant data, such as turnover rates, the template calculates projected inventory levels for a span of seven years. This feature allows to anticipate  inventory needs and make informed decisions regarding procurement and stock control.
Secondly, the template incorporates a smoothing mechanism to minimize abrupt fluctuations in the inventory forecast. 
One of the template's notable characteristics is its full automation. Users can easily substitute the provided inputs with their own data, and the template will automatically recalculate the forecasted inventory levels accordingly. This automation saves time and effort, as users need not perform complex calculations manually. It streamlines the process and allows for quick updates whenever new information becomes available.
The template follows a three-step approach to generate the inventory forecast. The first step involves producing the inventory balance, which takes into account the starting inventory and the projected COGS. This establishes the initial inventory levels for the forecast period. In the second step, the template generates nominal purchases based on the forecasted COGS and the desired turnover rate. Finally, in the third step, the purchases are normalized to eliminate any negative values, ensuring a realistic and practical projection.
Overall, this Excel template provides businesses with a comprehensive and automated solution for inventory forecasting. Its imaginative example, spanning seven years, allows users to gain insights into their future inventory needs, while the smoothing feature and automation streamline the forecasting process, improving inventory management efficiency.

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Vladimir Baydin Ph.D. MB offers you this Best Practice for free!

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