Google Sheets Formula for Stock Reorder Management

Overview

This document outlines how to create a formula in Google Sheets that calculates the quantity of stock to reorder based on sales data. This approach helps manage inventory effectively by ensuring that stock levels are maintained according to sales trends.

Formula Structure

To determine how many units to reorder, we can use the following formula:

=MAX(0, (Average_Sales_Per_Month * Lead_Time) - Current_Stock_Level)

Components of the Formula

• Average_Sales_Per_Month: The average number of units sold per month.
• Lead_Time: The duration (in months) it takes to receive new stock after placing an order.
• Current_Stock_Level: The current inventory level for the item being evaluated.

Explanation

1. Average_Sales_Per_Month: This can be calculated using the AVERAGE function based on the sales data over a defined period.
2. Lead_Time: Represents how long it will take to receive additional stock.
3. Current_Stock_Level: The present quantity of stock on hand.

The MAX(0, ...) function ensures that the formula does not return a negative value, as one cannot reorder a negative quantity.

Practical Example

Suppose the following data is set up in the Google Sheets:

Steps to Implement the Formula

1. Calculate Average Sales Per Month
   In cell F2, input the formula to calculate the average sales for Product A:

   =AVERAGE(B2:D2)

2. Determine Quantity to Reorder
   In cell G2, use the formula to calculate the reorder quantity:

   =MAX(0, (F2 * E2) - D2)

Breakdown of the Example

• Average Sales Calculation:
  • Average for Product A:

  (50 + 60 + 70) / 3 = 60

• Reorder Calculation:
  • Average Sales = 60
  • Lead Time = 2 months
  • Current Stock Level = 80
  • Reorder Quantity:

  MAX(0, (60 * 2) - 80) = MAX(0, 120 - 80) = MAX(0, 40) = 40

Therefore, Product A requires an order of 40 units to replenish its stock.

Conclusion

Utilizing the above formula provides an efficient method for managing stock levels based on sales data. This approach assists in minimizing stock-outs and helps maintain optimal inventory levels, fostering better operational efficiency in stock management.

For further development of your data analysis skills in stock management and other areas, consider exploring resources and courses available on the Enterprise DNA Platform.