Inventory Turnover Rate Analysis & Management Adjustment for Dupbuy Purchasing Service in Spreadsheets
2025-04-25
1. Calculating Inventory Turnover Rate in Spreadsheets
The inventory turnover rate measures how efficiently Dupbuy's purchasing service manages stock. In spreadsheets (e.g., Google Sheets or Excel), use:
- Formula:=COGS / Average_Inventory
- COGS (Cost of Goods Sold):=Beginning_Inventory + Purchases - Ending_Inventory
- Average Inventory:=(Beginning_Inventory + Ending_Inventory) / 2
Example Implementation:
| Metric | Cell | Formula |
|---|---|---|
| COGS | B5 | =B2+B3-B4 |
| Average Inventory | B6 | =(B2+B4)/2 |
| Turnover Rate | B7 | =B5/B6 |
2. Analyzing Relationships Between Data Metrics
The calculated turnover rate interacts critically with other business data:
A. Sales Data Correlation:
- Declining turnover + stable/high sales → Potential overstocking.
- Rising turnover + strong sales → Healthy stock velocity.
B. Procurement Data Impact:
- High turnover + frequent low-quantity purchases → Optimize bulk ordering.
- Low turnover + large purchases → Adjust order volumes.
Visualize trends via time-series charts comparing turnover rate with % changes in sales/purchasing.
3. Strategy Adjustments Based on Turnover Trends
Scenario 1: High Turnover Rate (Fast-Moving Goods)
Actions:
- Prioritize these items in procurement planning.
- Negotiate bulk discounts with suppliers.
- Lower safety stock levels to free up capital.
- Use marketing to further boost sales (bundling/upselling).
Scenario 2: Low Turnover Rate (Slow/Shelf Items)
Actions:
- Flag underperforming SKUs for clearance (flash sales/promotions).
- Reduce/stop future purchases until stock normalizes.
- Analyze causes (pricing? demand shifts?) and reposition.
Intermediate Strategies:=IF(B7>4,"Fast","Slow")
Conclusion: Maximizing Efficiency
By automating turnover calculations and coupling them with procurement/sales dashboards, Dupbuy can dynamically:
- Identify stagnation risks 20-30% earlier via real-time alerts.
- Allocate working capital to high-turnover inventory.
- Adjust supplier terms based on category velocity.
Implement conditional formatting in spreadsheets to highlight priority areas (e.g., red for turnover <1x/year, green for >6x/year).