Average age of inventory

The (average) age of each product in stock. For example, product received in Jan, but remains until Aug.

### Details

Unit: Time

Direction: Minimize

Unit: Days

Listed in:
Tags:

### Benchmark Results

This KPI is most used for:
Operational Excellence

1. How we can calculate average inven.

2. Can you give the formula

3. It is not a formula, but facts. If the product is has arrived in Jan and remains until Aug, it has been inventory for 7 months. Pareto the aged inventory and add up the dollars for each section you determined. It gives a good picture and you can see what items are the oldest.

4. You can use a Weighted Average fórmula to calculate your Stock Aging (Weighting the days by the dollars involved). It is:

SUM (QtyItem * Item Price * Days in Stock) / SUM (QtyItem * Price Item)

It looks like these. Supose you have:

Item 1: 2 units, USD10 e/a, 100 days in stock
Item 2: 10 units, USD 20 e/a, 50 days in stock

The formula is:

(2*10*100 + 10*20*50)/(2*10 + 10*20) = 54.54

So, your stock is aged about 54 days (in weighted average, in Spanish, we say “Promedio Ponderado”)

[As you can see, you cannot simplify the numerator and denominator]

5. You can use a Weighted Average fórmula to calculate your Stock Aging (Weighting the days by the dollars involved). It is:

SUM (QtyItem * Item Price * Days in Stock) / SUM (QtyItem * Price Item)

It looks like these. Supose you have:

Item 1: 2 units, USD10 e/a, 100 days in stock
Item 2: 10 units, USD 20 e/a, 50 days in stock

The formula is:

(2*10*100 + 10*20*50)/(2*10 + 10*20) = 54.54

So, your stock is aged about 54 days (in weighted average, in Spanish, we say “Promedio Ponderado”)

[As you can see, you cannot simplify the numerator and denominator]