HML Inventory Analysis Explained


Brody Hall

 on July 3, 2022. 
Reviewed by 

Joel Taylor

PC keyboard key written "inventory management"

HML inventory analysis is an inventory management strategy that can be used in inventory management to identify the quantity of a particular item that should be ordered to meet customer demand. The analysis uses historical sales data to calculate the projected demand for an item and then determines the minimum and maximum order quantities that will meet that demand. This information can be used to create an optimal ordering schedule for the item.

What Is HML Inventory Analysis Useful For?

HML inventory analysis is a technique used to evaluate the efficiency of a company's inventory management practices. The analysis can help identify areas where the company could improve its operations and increase its profits. Specifically, the analysis looks at how well the company is able to predict demand for its products and how well it is able to meet that demand. In terms of inventory management, it also examines how much inventory the company is holding and how much it is costing the company to hold that inventory.

How Is HML Inventory Analysis Used in Inventory Management?

The HML inventory analysis is used to help with inventory management by breaking down the data into useful categories. This can help to identify what is selling well and what needs to be ordered more of, as well as what isn’t selling as well and might need to be discounted or removed from the inventory. It can also help track how much stock is being rotated and how often items are being sold. This information can help businesses make better decisions about what items to order and when they should order them. This is essential to tracking inventory on Shopify and other e-commerce platforms.

HML Analysis vs. ABC Analysis

ABC analysis and HML inventory analysis are two different methods of categorizing inventory. ABC analysis is a system for classifying inventory based on the annual sales dollar value of each item. Items that have the highest annual sales value are classified as A items, followed by B items, then C items. The goal of ABC analysis is to focus management's attention on the high-value items that account for the majority of a company's sales.

HML inventory analysis is a system for classifying inventory based on its usage or consumption rate. Items that are used more often are classified as H (high) items, followed by M (medium) items, then L (low) items. The goal of HML inventory analysis is to ensure that the most popular items are always in stock.

Both ABC analysis and HML inventory analysis are useful methods for categorizing inventory.

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