Inventory Management 101- Aging Inventory

Aging Inventory Management

An Aging Inventory is the inventory that has been identify as slow moving base on Demand Forecast Planning, plus an additional cost to the warehouse or stores for storage of the inventory until it is used or sole.

The role of inventory management is to maintain a desired stock level of specific products or items. The desired level is for fulfillment of demand, while minimized the inventory holding cost

Table 1

 
      Analysis of the Aging Inventory base on Table 1

1.     Aging Days Categories

a.     To Categorize the Aging Days Categories (Column J)

b.    Excel Formula of Nested IF

=IFS(I2<=50,"1-50days", I2<=100,"51-100days", I2<=150,"101-150days", I2<=200,"151-200days", I2>=200,">200days")

2.     Base on the aging days, compute the total amount (Cell H24)

3.     Provision of inventory aging amount base on pareto, 80/20 rules

4.     This example, the inventories of ITEM A_1 to ITEM A_5,  can be provision for further disposition.

5.     Further Inventory disposition plan can be via the following methods

o   Scrap

o   Cross sales

o   Reduce future buy, if possible, base on forecast

    

About the Author

Grace is a freelancer for Supply Chain Management specialized in helping companies reducing operation costs and increase profits through optimized Supply Chain, Sourcing and Procurement Operation.

   

 Click to view profile