To calculate how many supplies to order, what is the first step in inventory management?

The first step in inventory management is to estimate the usage rate. This involves analyzing how much of a particular supply is used over a certain period. Understanding the usage rate is crucial because it provides the foundation for all subsequent inventory decisions. It helps determine how frequently items need to be reordered and in what quantities, ensuring that supplies are available when needed without overstocking.

Once the usage rate is established, it becomes easier to move on to the next steps, such as calculating current stock and determining required stock levels. These later steps rely on having a solid grasp of how quickly supplies are consumed, which influences the timing and quantity of orders placed. By accurately estimating the usage rate first, inventory management can be done more effectively and efficiently.