Days of Inventory – Definition, Calculation & Benchmarks

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

• inventory turnover
• out-of-stock rate

Practical Example

Reduction of days of inventory from 80 to 45 days:

→ lower storage costs with stable delivery capability

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Conclusion

 Days of inventory is a key control metric for inventory and liquidity.