Days of Inventory
What means Days of Inventory?
Days of inventory indicates how many days the current inventory will last to meet demand.
How is it calculated?
Formula:
Inventory ÷ average daily consumption
Example:
Inventory: 10,000 units
Daily consumption: 200 units
→ Days of inventory = 50 days
Benchmarks
- 20–60 days = typical
- < 20 days = risk
- >= 60 days = high capital commitment
Significance
This metric helps manage:
- replenishment
- capital commitment
- delivery capability
Optimization
- more accurate forecasts
- adjustment of safety stock
- better replenishment planning
Relation to other KPIs
Practical Example
Reduction of days of inventory from 80 to 45 days:
→ lower storage costs with stable delivery capability
❓ FAQ
Which is better: high or low range?
A medium range is ideal—balance is key.
How often should I calculate?
Regularly (daily or weekly).
Conclusion
Days of inventory is a key control metric for inventory and liquidity.