How do you interpret weeks of supply?
It is calculated by dividing the current inventory on hand by the average sales.
- Weeks of Supply = On Hand Inventory ÷ Average Weekly Units Sold.
- Automate your supply process: An inventory management software will simply do the trick.
- Bring down your supplier lead times: You can control your stock levels by doing this.
What is the week of supply?
A metric fundamental to managing the retail supply chain is weeks of supply (WOS). Weeks of supply tells the inventory manager how long the current on hand will last based on current sales demand. By keeping your eye on weeks of supply, you can avoid inventory stock outs and lost sales.
What is WOS retail?
Weeks of Supply (WOS), is a key performance indicator (KPI) that all retailers should watch closely to understand the health of their inventory. WOS is a measure of how many weeks the inventory for a particular item or a category will last at the current or forecasted Rate of Sale (ROS).
What are days of supply?
It measures how long the inventory on hand will last. If, for example, a manufacturer consumes 100 units a day of a certain component in manufacturing and has 800 units on hand, it has an eight-day supply.
What is a healthy Gmroi?
The GMROI is a useful measure as it helps the investor or manager see the average amount that the inventory returns above its cost. Some sources recommend the rule of thumb for GMROI in a retail store to be 3.2 or higher so that all occupancy and employee costs and profits are covered.
How do I calculate WOS?
WOS acts as a metric to value the life of inventory on hand in weeks. In other words, how many weeks it will take for an item to sell out based on current on hand inventory and future projected weekly sales. WOS is calculated as inventory on hand divided by future average weekly sales.
How is WOI calculated?
One way to calculate weeks of inventory on hand is to divide the average inventory for the accounting period by the cost of goods sold for the same period and multiply by 52. The cost of goods sold is stated on a company’s income statement.
What is days of supply in supply chain?
Days in inventory (also known as “Inventory Days of Supply”, “Days Inventory Outstanding” or the “Inventory Period”) is an efficiency ratio that measures the average number of days the company holds its inventory before selling it. The ratio measures the number of days funds are tied up in inventory.
What are the Inventory Days of supply?
This measure projects the amount of inventory (stock) expressed in days of sales. It is calculated as: [the average value of inventory at standard cost] / [annual cost of goods sold (COGS) / 365].