The Chess Sets Business – How Much Inventory to Hold for an Online Retailer of Chess Sets?
Approaching the point of a mature business brings decisions of policy that are best not left to chance. Various factors are involved in deciding how much stock to hold. Along with a gut feel these should lead to a policy decision so that the purchase of inventory for an online company doesn’t end up like the tail wagging the dog, overshadowing the profit business model. We will take the example of retailing chess sets and other chess products in analysing the factors in coming to the right decision. The Range If a large range of chess products are held, such as with Chess Baron in the US and UK, how much of each line should be held? Clearly if an eCommerce company such as this had 20 different lines, the solution is simple, and the ratio of stock value to total retail sales looks pleasing to any bank manager, perhaps around 10%. In the above example, the retailer runs with a fairly large inventory compared to many in the industry, almost 200 lines in total. To hold even ten of each lin
