Blog Post
Minimum Order Quantity
Cloud Accounting • October 1, 2019
Oh no, not inventory again!
Inventory is the biggest asset to your company, so in order to save money and make money, you need to protect that asset and nurture it in the right direction. Without implementing inventory management techniques, you’ll never get ahead.
What is Inventory Management?
Inventory management is the supervision of non-capitalized assets (inventory) and stock items. A component of supply chain management, inventory management supervises the flow of goods from manufacturers to warehouses and from these facilities to point of sale
Inventory Management Techniques
This week we are focusing on Minimum Order Quantity and why it is one of the most popular and effective inventory management techniques you can use to improve your business.
Minimum Order Quantity
Minimum order quantity (MOQ) is the lowest set quantity of stock that a provider is willing to sell. If you can’t purchase the MOQ of a particular product, then the provider won’t sell it to you.
The purpose of minimum order quantities is to allow suppliers to increase their profits whereas getting rid of additional inventory more quickly and eliminating the “bargain shoppers” at the same time.
A minimum order amount is set based on your total value of inventory and any other expenses you've got to pay before reaping any profit – which means MOQs help wholesalers stay profitable and maintain healthy cash flow.
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Just-in-Time (JIT) Inventory Management is simply creating what's required, when it’s required, within the amount required.
ABC analysis of inventory is a technique of sorting your inventory into three classes according to how well they sell and how much they cost to hold
Economic order quantity is the lowest amount of inventory you want to order to fulfil peak client demand while not going out of stock and without producing obsolete inventory.
