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This is a question not really about "programming" (is not specific to any language or database), but more of design and architecture. It's also a question of the type "What the best way to do X". I hope does no cause to much "religious" controversy.

In the past I have developed systems that in one way or another, keep some form of inventory of items (not relevant what items). Some using languages/DB's that do not support transactions. In those cases I opted not to save item quantity on hand in a field in the item record. Instead the quantity on hand is calculated totaling inventory received - total of inventory sold. This has resulted in almost no discrepancies in inventory because of software. The tables are properly indexed and the performance is good. There is a archiving process in case the amount of record start to affect performance.

Now, few years ago I started working in this company, and I inherited a system that tracks inventory. But the quantity is saved in a field. When an entry is registered, the quantity received is added to the quantity field for the item. When an item is sold, the quantity is subtracted. This has resulted in discrepancies. In my opinion this is not the right approach, but the previous programmers here swear by it.

I would like to know if there is a consensus on what's the right way is to design such system. Also what resources are available, printed or online, to seek guidance on this.

Thanks

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    When you say "the previous programmers here swear by it", do you mean they swear every time they have to work on it?
    – MusiGenesis
    Nov 13, 2008 at 15:50

12 Answers 12

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I have seen both approaches at my current company and would definitely lean towards the first (calculating totals based on stock transactions).

If you are only storing a total quantity in a field somewhere, you have no idea how you arrived at that number. There is no transactional history and you can end up with problems.

The last system I wrote tracks stock by storing each transaction as a record with a positive or negative quantity. I have found it works very well.

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    +1 I had the same dilemma and I think now that this is the best choice
    – INS
    Nov 10, 2010 at 20:03
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    @Neil - can you comment on performance of this approach. it seems to be the favored approach, but if you have hundreds of products and thousands of transactions how or when are you calculating the cumulative totals. or are you just storing the cumulative total in another place with the peace of mind in knowing you can recalculate if needed?
    – Simon_Weaver
    Jul 13, 2011 at 20:01
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    I ran a test - I posted about 3 million records (of positive and negative inventory adjustments) over 2000 products. It took only a fraction of a second to count the total sum of all the rows, grouped by SKU. I have to say I was absolutely astounded how quickly it worked, and for the project I'm doing I definitely have orders of magnitude worth of growth left and won't need to worry about it anytime soon. Obviously if you're displaying realtime inventory totals on a website you'd probably want to cache them, but even across all 2000 products I can almost instantly calculate the total sums.
    – Simon_Weaver
    Jul 19, 2011 at 7:46
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    Banking / accounting systems do something similar with transactions (Debit or Credit) often as separate fields but with the same summation effect. Primarily for operational reasons a monthly balance is created (There is usually a verification month end process) but this is also a method of being able to add up 12 monthly delta numbers in order to quickly add up a year instead of every transaction in a year. When done across years and millions of accounts the performance benefit is real and also allows for a correction several months ago to only require the recalculation of that month's close.
    – ClearCrescendo
    May 1, 2014 at 22:20
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    You should apply both, 1 field is quantity, and 1 table for transaction. The quantity field can recalculate when need. You need this field because performance. When end of month. we should move all number form pre month to new month. This is my ERP system working. and working well
    – Wolf
    Nov 16, 2015 at 9:43
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It depends, inventory systems are about far more than just counting items. For example, for accounting purposes, you might need to know accounting value of inventory based on FIFO (First-in-First-out) model. That can't be calculated by simple "totaling inventory received - total of inventory sold" formula. But their model might calculate this easily, because they modify accounting value as they go. I don't want to go into details because this is not programming issue but if they swear by it, maybe you didn't understand fully all their requirements they have to accommodate.

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both are valid, depending on the circumstances. The former is best when the following conditions hold:

  • the number of items to sum is relatively small
  • there are few or no exceptional cases to consider (returns, adjustments, et al)
  • the inventory item quantity is not needed very often

on the other hand, if you have a large number of items, several exceptional cases, and frequent access, it will be more efficient to maintain the item quantity

also note that if your system has discrepancies then it has bugs which should be tracked down and eliminated

i have done systems both ways, and both ways can work just fine - as long as you don't ignore the bugs!

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    hmm. returns isnt really exceptional is it? unless you're selling purely perishable items or something else that can't be re-sold
    – Simon_Weaver
    Jun 13, 2011 at 22:29
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    @Simon: one of the early inventory systems I wrote was for a custom ice cream shop. Returns were not only exceptional, they were practically impossible ;-)
    – Steven A. Lowe
    Jun 13, 2011 at 22:56
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I would opt for the first way, where

the quantity on hand is calculated totaling inventory received - total of inventory sold

The Right Way, IMO.

EDIT: I would also want to factor in any stock losses/damages into the system, but I'm sure you have that covered.

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It's important to consider the existing system and the cost and risk of changing it. I work with a database that stores inventory kind of like yours does, but it includes audit cycles and stores adjustments just like receipts. It seems to work well, but everyone involved is well trained, and the warehouse staff aren't exactly quick to learn new procedures.

In your case, if you're looking for a little more tracking without changing the whole db structure then I'd suggest adding a tracking table (kind of like from your 'transaction' solution) and then log changes to the inventory level. It shouldn't be too hard to update most changes to the inventory level so that they also leave a transaction record. You could also add a periodic task to backup the inventory level to the transaction table every couple hours or so so that even if you miss a transaction you can discover when the change happened or roll back to a previous state.

If you want to see how a large application does it take a look at SugarCRM, they have and inventory management module though I'm not sure how it stores the data.

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I think this is actually a general best-practices question about doing a (relatively) expensive count every time you need a total vs. doing that count every time something changes, then storing the count in a field and reading that field whenever you need a total.

If I couldn't use transactions, I would go with the live count every time I needed a total. If transactions are available, it would be safe to perform the inventory update operations and the saving of the re-counted total within the same transaction, which would ensure the accuracy of the count (although I'm not sure this would work with multiple users hitting the database).

But if performance is not really a huge problem (and modern databases are good enough at counting rows that I would rarely even worry about this) I'd just stick with the live count each time.

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I've worked on systems that solve this problem before. I think the ideal solution is a precomputed column, which gets you the best of both worlds. Your total would be a field somewhere, thus no expensive lookups, but it can't get out of sync with the rest of your data (the database maintains the integrity). I don't remember which RDMSs support precomputed columns, but if you don't have transactions, that might not be available either.

You could potentially fake precomputed columns (very effectively... I see no downside) using triggers. You'd probably need transactions though. IMHO, keeping data integrity when you're doing this sort of controlled denormalization is the only legitimate use for a trigger.

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Django-inventory geared more to fixed assets, but might give you some ideas.

IE: ItemTemplate (class) -> ItemsOnHand (instance)

ItemsOnHand can be linked to more ItemTemplates; Example Printer & the ink cartridges is requires. This also allows to set Reorder points for each ItemOnHand.

Each ItemsOnHand is linked to InventoryTransactions, this allows for easy auditing. To avoid calculating actual on hand items from thousand of invetory transactions, checkpoints are used which are just a balance + a date. To calculate items on hand query to find the most recent checkpoint and start adding or substracting items to find the current balance of items. Define new checkpoints periodically.

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I can see some benefit to having the two columns, but I'm not following the part about discrepancies - you seem to be implying that having the two columns (in and out) is less prone to discrepancy than a single column (current). Why is that?

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Is not having one or two columns, what I meant with "totaling inventory received - total of inventory sold" is something like this:

Select sum(quantity) as inventory_received from Inventory_entry
Select sum(quantity) as inventory_sold from Sales_items

then 

Qunatity_on_hand = inventory_received - inventory_sold

Please keep in mind that I oversimplified this and my initial explanation. I know there is much more to inventory that just keeping track of quantities, but in this case that's were the problem lies and what we want to fix. At this point the reason to change it is preciselly the cost of supporting the problems caused by the current design.

Also I wanted to mention that although this is not a "coding" question is related to algoritms and design which IMHO are very important topics.

Thanks everybody for your answers so far.

Nelson Marmol

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    the drawback to this particular solution is that performance will get worse and worse over time, as you have to keep a record of all inventory ever received or sold, indefinitely, in order to get the correct current quantity!
    – Steven A. Lowe
    Nov 13, 2008 at 16:02
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We solve different problems, but our approach to some of them might be interesting to you.

We allow the system to make a "best guess", and give the users regular feedback about any of those guesses that look wrong.

To apply this to inventory, you could have 3 fields: 

inventory_received
inventory_sold
estimated_on_hand

Then, you could run a process (daily?) along the lines of: 

SELECT * 
FROM   Inventory
WHERE  estimated_on_hand != inventory_received - inventory_sold

Of course, this relies on users looking at this alert, and doing something about it.

Also, you could have a function to reset inventory some how, either by updating inventory_sold/received, or perhaps adding another field "inventory_adjustment", which could be positive or negative.

... just some thoughts. Hope it's helpful.

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