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Inventory Forecasting (Restocking and Cash Requirement) (Excel XLSX)
Excel (XLSX)
VIDEO DEMO
BENEFITS OF THIS EXCEL DOCUMENT
- Dynamic inventory forecasting.
INVENTORY MANAGEMENT EXCEL DESCRIPTION
Updated August 17th, 2023 – The template now runs off monthly data structures instead of daily. This allows for easier scaling (adding 1,000s of SKUs) and better general usability. Additionally, an accounts payable balance will display based on configurable payment terms (up to three payment events for a given purchase) and visuals were upgraded.
The growth inputs are also much cleaner for the user to update / change as an annual growth rate is entered per year instead of per month and that applies to the average sales per month.
This template is designed to forecast the expected sales of inventory for up to a 72-month period. The model is driven off of average historical sales by month (accounts for seasonality) and the user can define % change from historical averages in order to drive the forecasted usage.
The final output is going to show the user how much inventory needs to be purchased per month and the cost of that.
Factors considered include:
• Lead time
• Starting inventory balance
• Payment terms
• Minimum inventory level (safety stock)
• Months to reorder for
There are up to 19 SKUs this template will work for by default, but it is very easy to expand for as many as you need to account for. Other data summaries include the expected units reordered per month per SKU, running inventory balance per SKU by month and year, sales per month per SKU, revenue earned per SKU (per defined average selling price), and cost per month per SKU (per defined average cost per unit).
The model works off a expected units sold in order to get the most accurate forecast possible and can handle any input range for the various things that effect when inventory needs to be purchased, how slow or fast it will be used (per historical sales / seasonality logic).
The primary goal is to understand the expected cash requirement per month that is going to be needed to buy inventory with.
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TOPIC FAQ
How do you forecast inventory needs while accounting for seasonality?
Use historical average sales broken down by month to capture seasonal patterns, then apply user-defined percent changes from those monthly averages to drive expected usage. This method produces per-SKU expected units sold over the forecast horizon and is implemented on a monthly basis for up to 72 months.What are the primary factors that determine when to reorder inventory?
Reorder timing depends on lead time, starting inventory balance, minimum inventory level (safety stock), and the chosen months-to-reorder; payment terms affect cash timing. These inputs are configurable per SKU in the template and supported by the model’s default 19-SKU structure.How should I model cash requirements for purchasing inventory?
Calculate the monthly units to purchase per SKU, multiply by cost per unit, then map payment timing into accounts payable schedules. The template can display accounts payable balances based on configurable payment terms and up to 3 payment events to show monthly cash requirements.What features should I look for when choosing an Excel inventory forecasting template?
Prioritize monthly data structures for seasonality, the ability to model lead time and safety stock, configurable payment-term handling, SKU-level outputs (units, running balance, cost), and scalability to many SKUs; these attributes align with the Inventory Forecasting (Restocking and Cash Requirement) template’s monthly data structure and default 19-SKU capacity.How much time does a ready-made template save versus building a model from scratch?
A prebuilt template encapsulates historical-seasonality logic, reorder and safety-stock calculations, and payment-term AP scheduling, avoiding redevelopment of those routines. The referenced template supports month-by-month forecasting and cash outputs across a planning horizon of up to 72 months.Can an inventory forecast template scale to handle thousands of SKUs?
Templates that run off monthly data structures are easier to scale; the updated model specifically notes easier scaling for adding thousands of SKUs while providing a 19-SKU default for initial use in Inventory Forecasting (Restocking and Cash Requirement).How do I model split payment terms for inventory purchases?
Represent purchase payments as configurable payment events that post to accounts payable over time; the template displays accounts payable balances based on up to 3 configurable payment events for a given purchase to reflect staggered payment timing.What output reports are typical from an inventory forecasting and restocking model?
Expect SKU-level outputs including expected units reordered per month, running inventory balance by month and year, monthly sales per SKU, revenue (using average selling price), cost per month per SKU, and the expected monthly cash requirement to purchase inventory.Source: Best Practices in Inventory Management Excel: Inventory Forecasting (Restocking and Cash Requirement) Excel (XLSX) Spreadsheet, Jason Varner | SmartHelping
ABOUT THE AUTHOR
I graduated in 2011 with a Bachelor's degree in Accounting and began my career as a financial analyst at a small chain of auto repair shops. After gaining valuable experience, I launched my own practice specializing in real estate underwriting, later expanding into general business modeling.
I honed my spreadsheet modeling expertise by completing over 400 projects on Upwork with a 100% success
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