This analysis classifies inventory based on quantity, the rate of consumption and frequency of issues and uses. Here is the basic depiction of FSN Analysis:
F stands for Fast moving, S for Slow moving and N for Non-moving items.
- Fast Moving (F): Items that are frequently issued/used
- Slow Moving (S): Items that are issued/used less for a certain period
- Non-Moving (N): Items that are not issued/used for more than a certain duration
The non-moving items (usually, not consumed over a period of two years) are of great importance. It is found that many companies maintain huge stocks of non-moving items blocking quite a lot of capital.
Moreover, there are thousands of such items. Scrutiny of these items is made to determine whether they could be used or to be disposed off. The classification of fast and slow moving items helps in arrangement of stocks in stores and their distribution and handling methods.