FSN Analysis: Why Published Cut-Offs Disagree and How to Set Yours

FSN analysis sorts every stock item into fast-moving (F), slow-moving (S) or non-moving (N) by how recently and how often it is issued or sold. In Excel it takes six steps and one formula per column, from a stock export that holds last issue date, issue count, units, stock on hand and unit cost.

Set up columns A to G as: SKU code, last issue date, issues in the last 12 months, first receipt date, stock on hand, unit cost, stock value. Put the review date in K1, the fast cut-off in days in K2 and the slow cut-off in days in K3.

Published rules measure different things: turnover ratio, share of consumption, number of transactions and days since last use. Each splits the same stock differently. We ran three of them on 3,857 real SKUs, and the fast-moving count ranged from 599 to 2,930.

We compared the cut-offs in six published guides, as read in November 2026. They come from ShipBob, Sage Software India, Deskera, Kladana, Tally Solutions and G Pro International (Akiba Tools), all software or tool publishers' own pages. This page is published by Arka Inventory, and none of those guides is ours.

The ITR guides also disagree on how much stock each class holds. Non-moving is 60 to 65% of inventory in two of them and 50 to 55% in the third.

How we tested. We took the 541,909 lines in the Online Retail dataset (Chen, 2015, CC BY 4.0), a UK online gift wholesaler's transactions from 1 December 2010 to 9 December 2011. We removed 9,288 cancellation lines, lines with zero or negative quantity or price, and non-product codes (anything not starting with five digits, such as postage). We kept the 365 days to 9 December 2011: 505,793 lines across 3,857 SKUs. We ran the analysis in November 2026. The dataset has no stock balances, so we could not test the turnover ratio rule.

What the table shows:

• Non-moving means three different things. It is about 11% of SKUs under the first two rules and 65% under the share-of-units rule.
• The same item gets opposite labels. Of the 2,787 SKUs the transactions rule calls fast, 1,445 land in non-moving under the share-of-units rule. The transactions and share-of-units rules agree on only 26.7% of SKUs.
• The recency rule leaves a gap. Its bands skip days 91 to 179, so 217 SKUs get no label. Close the gap by letting slow run up to the non-moving cut-off, as in step 4 above.
• Time-based rules also disagree. Transactions and recency give different labels for 1,092 of 3,857 SKUs (28.3%), counting the unlabelled ones.
• Only 782 of the 3,640 SKUs that the recency rule labels get the same label under all three main rules.

Caution: this is one UK wholesaler's year, including a Christmas peak. It shows how rules diverge, not what is typical for Indian stores.

Measure in days since the last issue, start from the range published for your item type, and back-test it on last year's data. The published ranges are starting points, not standards. The right cut-off is the one that rarely mislabels stock that goes on to sell.

Run it per warehouse where you hold stock in more than one location. An item can move fast in one and sit untouched in another.

A non-moving label misleads when the item is seasonal, newly stocked, or the rule leaves a gap. Seasonal stock is the costliest case, because the label stops a reorder just before demand returns.

We tested this on the same dataset. We took the 3,098 SKUs that had sold by 4 March 2011. Of those, 220 had no sale in the 180 days to 31 August 2011, which is non-moving under a 6-month recency rule. By 9 December, 42 of the 220 (19.1%) had sold again.

About one label in five (42 of 220) was wrong, and the few that were wrong carried most of the volume: 3 items made 1,424 of the 1,725 units sold. They were a glitter Christmas tree with bells (687 units), a diamanté ring assortment (528) and a white Christmas garland (209); the median item sold 3 units. This is one UK wholesaler's year with a Christmas peak.

Our recommendation: never label an item N within your slow cut-off of its first receipt, and tag seasonal lines so they are reviewed against last year's season.

Run FSN for movement, ABC for value and VED for criticality, then act on the combinations. FSN says nothing about price or importance, so it needs the other two. ABC ranks items by annual consumption value, unit cost multiplied by annual usage. Our guide to inventory management techniques covers choosing ABC cut-offs item by item.

VED (vital, essential, desirable) ranks items by how badly operations suffer without them. Our hospital inventory management guide covers VED cut-offs and expiry rules.

We give you the stock records and reports an FSN review rests on, in cloud software built natively on Salesforce. You get stock by warehouse, a Monthly Movements Report, minimum-stock-level reports with alerts, and custom reports and dashboards. Arka Inventory does not label items fast, slow or non-moving for you; the labelling in this method runs in your spreadsheet, and our reports give you the stock records to check it against.

• Reconcile first. Our Monthly Movements Report shows opening stock from the previous month and closing stock for the current month. Use it to check your export in step 1 before you label anything.
• Label by location. We show inventory across multiple warehouses, so you can run the review per warehouse.
• Protect your fast movers. Minimum-stock-level reports let you set alerts based on available and expected quantities, and our alerts cover low stock, back-order arrivals and inventory movements.
• Watch expiry. Lot and serial tracking, on our Enterprise plan, records batch and expiry dates, so you can see which slow items are running out of shelf life.
• See it in one place. Custom reports and dashboards let you tailor the views you review.

As of November 2026, plans start at US$199 a month billed yearly; see Arka Inventory pricing. To see it on your own stock, book a demo with our sales team; the 15-day free trial gives full access with no credit card.