Inventory Turnover Equation

Inventory turnover is a measure of the rate at which inventory is consumed, obtained by dividing annual sales at cost by the average aggregate inventory value maintained during the year.

This is the best level of inventory. Althought having six or seven turns in inventory per year is typical, the average high-tech firms settles for only about three turns.

The formula for average inventory:







Furthur Readings

Inventory Control Handbook by AHN Corporation
Essentials of Inventory Management by Max Muller
Business Mathematics, 10th Edition, Chapter 7, § 4, ISBN 0321277821

External Links

http://en.wikipedia.org/wiki/Inventory_control
http://www.invatol.com/BuyVenQual.html
http://www.cs-inventory-software.com/
http://www.inventoryops.com/articles.htm
http://www.businesslink.gov.uk/bdotg/action/layer?topicId=1074039371
http://www.effectiveinventory.com/articles.html
http://www.allbusiness.com/inventory-control/3069845-1.html