On your Inventory page, you see the following:
'Selling' shows how many units this product is selling a day.
'Good For' shows how many months the inventory will last for.
We calculate these numbers like this.
‘Selling’ = sales velocity =
(0.4 x Average Sales in last 3 days) +
(0.4 x Average Sales in last 7 days) +
(0.2 x Average Sales in last 30 days).
This formula helps to account for changes in number of sales within the month, and equalize it.
Let's say your product sold
10 in the last 3 days,
35 in the last 7 days and
211 in the last 30 days.
If we would only use last 3 days to calculate how many units are selling a day on average, we would show 'Selling 3.3 a day'.
But with our formula, we take into account fluctuations within the last month, so it will be (0.4 x 3.3) + (0.4 x 5) + (0.2 x 7.03) = 4.7. 'Selling 4.7 a day'.
If you run out of stock, the app remembers the last 'Selling' rate and continues showing it until the new stock arrives. This helps you to estimate how many units to order, if you did not order it yet before the stock depleted.
‘Good For’ is calculated using full product sales history, and the algorithm determines whether each of the upcoming months is high season or normal.
You can click on Details under the Good For number, to get exact calculation:
It will show you how it arrived at the number, step by step: