How many gas cylinders does a dealer need? Calculating by turnover

Cylinders are a dealer’s largest capital item: too few and you have to put customers off, too many and capital sits idle in the warehouse. This article answers the question how many gas cylinders does a dealer need by grouping cylinders according to where they are and calculating from actual turnover.

Where are a dealer’s cylinders?

Every cylinder always belongs to one of four groups:

• At customers’ homes: cylinders in use; customers who use two cylinders in rotation count as two.
• In circulation: empty cylinders waiting to be collected for a run, cylinders at the filling plant, and full cylinders on their way back.
• Full-cylinder stock in the warehouse, ready for delivery.
• Reserve: to cover busy days, cylinders away for inspection, damaged cylinders and lost cylinders.

Calculating each group from turnover

• Cylinders at customers’ homes = number of regular customers × number of cylinders each customer keeps.
• Cylinders in circulation ≈ average number of cylinders sold per day × number of days from collecting the empty cylinder to the full cylinder arriving back at the warehouse.
• Full-cylinder stock ≈ number of cylinders sold per day × number of days between two deliveries from the filling plant.
• Reserve: a percentage of the total of the three groups above, based on how much sales fluctuate and the number of cylinders that have to be withdrawn each year.

The number of days in circulation is often overlooked: a distant filling plant or waiting times for filling both increase the number of cylinders you need.

Worked example

The figures below are assumptions only, not norms. A dealer has 400 household customers using 12kg cylinders, each keeping one cylinder, and 20 restaurants using 45kg cylinders, each keeping two cylinders in rotation. On average it sells 15 12kg cylinders and 4 45kg cylinders a day; it takes 3 days from collecting the empty cylinder to the full cylinder arriving back at the warehouse; each delivery covers 2 days of sales; the reserve is assumed to be 10%.

If the filling plant is far away and the circulation cycle stretches to 5 days, the 12kg cylinders in circulation alone rise from 45 to 75. Replace the assumed figures with the actual figures from your records.

The mix of 12kg and 45kg cylinders

The two types must be calculated separately because their customers and turnover rates differ; how to split the ratio by sales area is covered in 12kg vs 45kg gas cylinders: which should a dealer stock.

Planning ahead for growth

• New customers: the monthly increase in customers multiplied by the number of months until the next batch of cylinders arrives.
• Peak season: when daily sales rise, the circulation and full-cylinder stock groups rise with them — see preparing gas stock for Tet.
• Cylinders withdrawn from rotation when they fall due for periodic inspection or are scrapped.
• Losses: customers who move house without returning cylinders, cylinders swapped by mistake; for how to limit them, see gas cylinder management for dealers.

Signs that you are short of cylinders

• You have to put customers off because you have run out of full cylinders, even though the filling plant has enough gas.
• Full-cylinder stock at the end of the day is regularly zero.
• You are tempted to keep cylinders past their inspection date or damaged cylinders in use for the time being — which is not permitted.

Conversely, empty cylinders sitting in the warehouse for weeks are a sign of over-investment.

Ordering additional cylinders in batches

Once you have the figures, order cylinders in rounds: confirm the capacity, quantity, valve type and the date you need them, giving priority to delivery before the peak season. The steps from sending a request to receiving the goods are covered in ordering gas cylinders in batches. You can order 12kg gas cylinders, 45kg gas cylinders and the LPG cylinder handwheel valve in the same round.

Frequently asked questions

Written by the VietnhatGas technical and sales team — a batch manufacturer of LPG cylinders. This content is for reference; regulations and standards may change, so please check the current texts.