How we can calculate average inven.
The (average) age of each product in stock. For example, product received in Jan, but remains until Aug.
How we can calculate average inven.
Can you give the formula
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.
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]
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]