Powdered milk is an essential food storage item and very easy to rotate. The easiest way is to make up a pitcher of 1-2 quarts of milk and keep in in your refrigerator. Every time a recipe calls for milk, use your powdered milk. When making pancakes, you can also add the dry powdered milk and water separately with the same results as if they were already mixed together.
We have never been able to tell a difference from regular milk when used in cooking. It won't keep forever, so plan to use the milk in your pitcher within about a week.
My favorite use for powdered milk is in creamed tuna and homemade macaroni and cheese. Both of those recipes use two cups of milk, and it would be a shame to use up regular milk for that.
The cheapest powdered milk often comes in huge containers unsuitable for a kitchen cupboard. The shape and size of this air-tight container (pictured above) works fabulously for storing the dry powdered milk in my baking cupboard. I bought it at Bed Bath & Beyond. You could probably also find it at Walmart or Target.
I prefer powdered milk from the grocery store (as pictured above); the cheapest I can find. This kind reconstitutes quickly and easily, and works in all of my recipes. The kind from the cannery is very lumpy when you add water, and is so fine that the powder spreads everywhere when you use it. Also, it cannot be used in certain baking recipes (like Peanut Butter Chocolate Chip Chews). It works really well to make up a pitcher of cannery milk after stirring thoroughly and letting it sit for a while. It is really hard to get rid of the lumps for immediate use, though.
So don't be afraid of powdered milk. You'll be surprised at how quickly you go through it! Check out my link on the right called "powdered milk" for a few ideas on how to use it.