During a sales slump, review sales history by product category. For seasonal products, calculate average daily sales for the same or a comparable period in previous years. Calculate the reorder point only when all inputs are available, including an already established safety stock.
During discounts, monitor margin and compare it with historical data. This helps assess how steep the price reduction is.
Compare sales across seasonal periods
Review historical sales at regular intervals: by day, week, or month. Such data analysis is used to identify trends, seasonality, and cycles.
For products with pronounced seasonal demand, use the same or a comparable period in previous years. Use this data to calculate average daily sales, which are needed to determine the reorder point.
Consider product categories separately. Do not infer the cause of a slump from a single sales chart.
Calculate the reorder point using available inputs
The reorder point is the stock level at which a new order is placed with a supplier.
Reorder point = average daily sales × lead time + safety stock.
Prepare the following for the calculation:
- average daily sales of the product in units;
- lead time in days;
- an already established safety stock in the same product units.
For a seasonal product, use average daily sales for the relevant seasonal period. The formula requires an already established safety stock. This article does not cover how to determine it.
The calculation gives you the reorder point. This formula does not determine the purchase quantity.
Check margins during discounts
If you offer discounts, monitor your margin and compare it with historical data. Use this comparison to assess whether the price has been reduced too steeply.
Do not use this comparison alone to determine the optimal discount percentage, and do not infer from it that sales are guaranteed to increase.
Review sales results and stock in Torgsoft
“Sales Analysis by Product Type” in Torgsoft shows sales results by product type. Use it to review the results for individual product categories.
“Stock Analysis by Storage Period” lets you review stock by supplier invoices and the length of time products have been stored in the warehouse.
Descriptions of these reports are available on the Torgsoft sales and stock analysis page.
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