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Hello all,
Like many I'm new to this industry and could use any and all help. Big question for me is how do you determine your inventory in the beginning? Buy equal numbers of shirts in each color and size? Thanx
 

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That's pretty much what I did when I started my own clothing line. I picked M, L & XL for Men and S, M & L for women to start off with. I then ordered equal amounts of each size of each color to begin with. After our first show, we found that we should have included Small for men's shirts and XL for women's shirts (at least for some of the designs). The more popular ones are L/XL for Men and Medium for women so you may want to order more quantities of those sizes.
 

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As far as knowing what sizes to stock......The general rule / ratio (and I got this from Quicksiliver and Volcom) is:

Women

xtra small 2.0
small 3.0
medium 3.0
Large 2.0

Men

small 1.5
Medium 2.5
Large 3.5
XL 2.5

For example....if you bough 100 mens shirts:

15 would be small
25 would be medium
35 would be large
25 would be XL

However, our target market is 17-29 years old. This formula might not work for your demographics.
 

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My tip for you would be to make sure you stock some XXL sizes. The US is a "big" market in more ways than one, and you'll be missing out on sales if you don't have the size that folks want.
 

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I'm at a sentence in my business plan that says:

"Company will hold ..... (this can be either dollar amount or number of units) of inventory at all times to ensure proper supply."

How should I come up with this number? I don't need a break down by sizes or men/women. Just a general number that will satisfy my daily sales.
I want to be able to drive that number from something instead of just coming up w/ a number from thin air.
I think it should be based on the projected sales. E.g. I project 1,000 munits sold per quarter. So I should always keep X% of this on hand.
Any ideas?
 

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I'm at a sentence in my business plan that says:

"Company will hold ..... (this can be either dollar amount or number of units) of inventory at all times to ensure proper supply."
I would stay away from having a certain number of units or value of inventory at all times. That is not a very good inventory management practice.
In the summer you would want more items on hand then in the winter.
Instead say what the average annaul value of inventory you plan on keeping.

How should I come up with this number? I don't need a break down by sizes or men/women. Just a general number that will satisfy my daily sales.
I want to be able to drive that number from something instead of just coming up w/ a number from thin air.
I think it should be based on the projected sales. E.g. I project 1,000 munits sold per quarter. So I should always keep X% of this on hand.
Any ideas?
Ok, first you need to determine your projected annual sales in dollars (at cost) otherwise known as Cost of Goods Sold (COGS).
Using the the 1000 units per qtr figure you gave at $20 dollars a shirt and assuming a %30 profit margin, the total annualized COGS would be $56,000

Now that you have your COGS, you need to project your target Inventory Turn.
At 30% margin a good overall turn would be 5. The lower your profit margin the higher your inventory turn should be and vice versa.

Now to get your Target Annual inventory you need to divide your projected sales ($56,000) by your Project inventory turn (5) and you get $11,200.
Now you probably won't achieve an Inventory Turn level right off the bat so you may want to understate the turn to 4. Which would cuase your inventory target to increase to $14,000. Average to the annual average inventory targets and you get an average annual inventory target of $12,600.
 

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Ron, another question (gonna sound dumb)- how do u come up w/ the 30% profit margin = 5 in inventory turn. Is there some sort of chart? So if my profit margin is higher or lower than the 30% in your example. how do i know what that equals to in inventory turns? THanks
 

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I just realized that I can't edit my previous posts in this thread....???

Anyways, i have the answer to my previous question. i decided to go with 4 based on my profit margin and it seems to be the industry standard currently.

the only thing i still haven't figured out is how Ron came up with
average annual inventory target of $12,600
Ron, if you read this, can u please tell me where did u get the $12K. Or if someone else sees the formula please break it down for me.
thanks a lot
 
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