INVENTORY MANAGEMENT FOR A STORE USING ABC AND XYZ-ANALYSIS WITH THE APPLICATION OF DISCOUNTS IN THE CALCULATION OPTIMAL ORDER SIZE

Abstract

The article considers the current issues surrounding the optimization of retail enterprises' inventory management logistics. The analysis of theoretical approaches and practical application of ABC-XYZ analysis for classifying assortments according to their impact on income and the stability of consumer demand was conducted. The aim of the article is to study the inventory management system of a pet store using ABC and XYZ analysis methods, with the goal of increasing inventory management efficiency through discounts on goods purchased. In the context of a dynamic pet goods market, the key factor in achieving efficiency is the adaptation of classical deterministic to wholesale discount systems and the particularities of storage costs in warehouses. In the context of an operating pet store, the segmentation of product groups was carried out to identify a priority category with a high level of demand predictability. The model for calculating the optimal order quantity (EOQ) according to the Wilson formula integrates the variability of purchase prices and the minimization of total ordering, and storage costs. The AX product group, comprising cat and dog food, has been identifies as a key source of revenue for pet stores. The optimal order volume for this group was calculated using the Wilson formula. Then, a different price for the discounted product was assigned and storage costs are determined. The use of discounts on inventory is a strategic tool for managing inventory and stimulating sales, which involves reducing the purchase or sale price. In the fields of accounting and tax accounting, discounts are reflected depending on the moment of their provision and affect the initial cost of inventory or sales revenue. Conclusions. Based on the calculations performed, a recommendation was given not to exceed the optimal order size in the inventory management process. If the cost of renting a warehouse is independent of occupancy, then the costs of storing a unit of goods actually become “conditionally free” until the warehouse is full. In such cases, it is financially advantageous to order the largest possible batches to get the largest discount, since this does not increase the current operating costs of renting. However, large inventories increase the risk of write-offs, which are costs that are generally undesirable for pet stores.