7 essential inventory management formulas for business success
Managing inventory involves a lot of math. Check out these 7 inventory management formulas to make sure you can make the most economical decision about your inventory.

Every business dealing with inventory needs to conduct inventory counts. This article will explore different ways of doing that and provides tips and tricks to make it as effortless as possible.
In an ideal world, the number of items shown on your inventory management software and warehouse would match exactly. But since we don’t live in an ideal world, you’ll often find discrepancies between these values. Whether it’s due to items getting lost, stolen, or damaged, differences are bound to happen and can lead to costly errors.
To ensure that your inventory records are correct, it’s important to periodically take physical inventory counts. This article provides guidance on counting inventory, including the best inventory counting methods to use and a step-by-step guide.
But before we dive into the details of how to do an inventory count, let’s first explore what exactly an inventory count entails.
An inventory count, also known as a physical inventory or stocktake, is the process of manually counting and verifying the number of goods and materials a business has in its stock at a specific time. This process is typically done to ensure the accuracy of the inventory records and to identify any discrepancies.
By conducting an inventory count, businesses can assess their current inventory levels and identify any potential issues or areas for improvement, such as overstocked or understocked items, inventory shrinkage, or inaccuracies in their inventory management processes.
Let’s briefly review the 4 types of inventory a manufacturing business deals with:
There are several different types of counts that businesses can use, depending on their specific needs and circumstances. Let’s go over the four most common ones.
This is an ongoing process of counting a small portion of the inventory regularly, usually daily or weekly. Cycle counting aims to identify discrepancies and correct them promptly rather than waiting for a full physical inventory.
This involves randomly selecting a subset of inventory items for counting. The sample size and items to be counted are determined based on statistical methods to obtain an accurate estimate of the total inventory levels.
A perpetual inventory system is an ongoing process of continuously updating the inventory records as inventory transactions occur, such as sales, purchases, or adjustments. This allows for a more accurate and up-to-date inventory count.
This involves counting all inventory items at a specific point in time, usually at the end of a fiscal period or year. A physical inventory provides a comprehensive and accurate picture of the inventory levels but can be time-consuming and disruptive to business operations.
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Taking a physical count of inventory may seem very straightforward — you start counting from one end and finish once you get to the other. However, in reality, a lot can go wrong, especially when dealing with a large number of items, so it’s best to have a plan in place.
Here are step-by-step instructions for conducting a physical inventory count:
By following these steps, businesses can conduct a thorough and accurate physical inventory count and identify any potential issues or areas for improvement in their inventory management processes.
Inventory counting can present several challenges to businesses, so it’s important to be prepared for them before starting. Let’s go over the most common challenges:
By identifying these challenges and implementing strategies to overcome them, businesses can improve the accuracy and efficiency of their inventory counting processes.
Katana is a powerful cloud manufacturing platform that can help you streamline your inventory management process, including stocktakes. With its intuitive interface and advanced features, Katana makes it easy to keep track of your inventory levels, schedule stocktakes, and reconcile any discrepancies.
One of the key benefits of using Katana for stocktakes is its real-time inventory tracking. Instead of relying on manual counts or periodic updates, Katana provides you with up-to-date information on your inventory levels at all times. This allows you to schedule stocktakes proactively rather than react to discrepancies afterward.
Katana also provides detailed reports and analytics on your inventory levels, including stock levels, reorder points, and lead times. This helps you identify potential inventory issues before they become a problem and make informed decisions about your inventory management strategy.
In addition, Katana offers a range of advanced features to simplify your stocktaking process, including:
These features make it easy to identify and reconcile discrepancies, so you can return to running your business.
By using Katana to manage your inventory and streamline your stocktaking process, you can save time, reduce errors, and focus on growing your business. So give it a try today by signing up for a free 14-day trial and see the difference it can make for your business.