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Sample Calculation

  • Company profile: Distributor of FMCG
  • Annual sales profit: 4.000.000 EUR
  • Service level: 93%
  • Average annual inventory in cost: 3.000.000 EUR
  • Interest rate: 3%
  • Average annual inventory in volume: 6.000 M3
  • Annual average storage costs per volume unit: 5 EUR/M3

Service level is 93%, which means that the company loses up to 7% (100%-93%=7%) of its annual sales profit.

7% lost sales for this company equals 301.075 EUR of lost sales profit annually.

With the help of Soft4Inventory, it is possible to cut these losses by half (calculated average from previous implementations). In this case, by increasing service level with the help of Soft4Inventory to 96,5% it is possible to gain 150.537 EUR of additional sales profit. The service level increase in this case requires no additional operating costs, and therefore this benefit is directly added to bottom line profit.

Simultaneously with the service level increase, a decrease of about 25% in inventory level can be expected (calculated average from previous implementations). In this calculator, only the related decrease in working capital costs and storage costs is calculated.

In this scenario, the decrease in annual working capital costs, calculated through the interest rate, is 22.500 EUR. The decrease in annual storage costs is 7.500 EUR.

Totals:

Annual benefit from service level increase: 150.537 EUR
Annual benefit from inventory decrease: 30.000 EUR

Annual Benefit Total: 180.537 EUR

Would you like to check in more detail what benefits your company can achieve through decreased stock level or increased service level? Sign up for our simulation, which includes your real inventory management data.

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