Inventory and stock
Unit of measure (UOM): meaning and conversions
Definition
Unit of measure: A unit of measure (UOM) is the unit a quantity is counted in, such as kg, litre, piece or carton; conversions link the units you buy, stock and sell in.
Also called: UOM, UoM, unit conversion, base unit, pack size, stock unit
Stock unit and pack units
Most businesses buy, store and sell the same product in different units. A wholesaler buys pens by the carton and sells boxes to shops and single pens at the counter. A masala maker buys chilli in 25 kg sacks and uses it by the kilogram. To keep stock correct, choose one stock unit, also called the base unit, for each product, and describe every other unit as a number of stock units.
The stock unit should be the smallest unit you ever sell or use: pieces, kg, grams or litres. If you sell single pens, the stock unit is a piece, not a box.
How unit conversion works
Every pack size has a conversion factor: how many stock units it holds. A 25 kg sack has a factor of 25 if you count in kg, and a carton of 500 pens has a factor of 500 if you count in pieces. From that factor:
- Stock quantity = number of packs × units per pack
- Cost per stock unit = pack cost ÷ units per pack
- Selling price per stock unit = pack selling price ÷ units per pack
Common unit mistakes
Mixing units in one record is the most common error: one person enters a delivery in cartons, another a sale in pieces, and the stock figure stops making sense. Choosing too large a stock unit, such as cartons, makes a single loose sale impossible to record. Changing the stock unit after you have transactions breaks every past figure, so add a new pack size instead. And watch rounding with weights: 0.333 kg typed three times is not 1 kg.
Worked example
Pens by the carton, box and piece
A stationery wholesaler counts pens in pieces. It buys cartons of 500 at ₹2,250, which is ₹4.50 a pen, and sells boxes of 10 at ₹65 and single pens at ₹8. It receives 6 cartons, or 6 × 500 = 3,000 pens. In a week it sells 40 boxes and 25 loose pens, 40 × 10 + 25 = 425 pens, leaving 2,575. The margin on each box is ₹65 − 10 × ₹4.50 = ₹20.
In managemate
Each product in managemate has one stock unit, such as kg, litre or pcs, typed in your own words, and stock is always counted in it. Add up to 30 pack sizes, each marked for buying, selling or usage, with how many stock units it contains, to six decimal places, such as a 25 kg sack or a box of 12. Purchase orders offer the buying packs, sales orders and the counter the selling packs, and formulas the usage packs; every quantity converts to the stock unit, and saved orders keep the conversion they were made with. Once a product has been used on an order, in stock or in a formula, its stock unit cannot be changed: add a pack size instead.
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