INCREASE YOUR PROFIT BY SPENDING : SIMPLE ORDERING METHODS (SPAN INDEX)!!!

INCREASE YOUR PROFIT BY SPENDING : SIMPLE ORDERING METHODS (SPAN INDEX)

HOW UNSCIENTIFIC PARTS ORDERING EFFECTS YOUR DEALERSHIP

1. INCREASE IN NON MOVING & DEAD STOCK
2. BURDEN OF BANK INTEREST
3. SHORTAGE OF STORAGE SPACE
4. CHANCES OF STOCK MISAPPROPRIATION
5. ROOM FOR STOCK VARIANCE

SPAN INDEX FOR ORDERING (Simplest method)

FORMULA

Step 1: Take current stock

Step 2: Add Goods in Transit

Step 3: Add Pending orders

Step 4: Sum up all the above data

Step 5: Take past average sales

Step 6: Divide Total stock with average sales

Step 7: Result is in current stock holdings

Split the data based on Current stock holding in 4 categories before ordering

SPAN INDEX

• (S) SAFE TO ORDER (Current holding stock between 1 month to 2 months)
• (P) PRECAUTION (Current holding stock between 2.1 months to 4 months)
• (A) AVOID (Current holding stock between 4.1 months to 8 months)
• (N) NOT AT ALL (Current holding stock more than 12 months)