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What is the stock turnover time period?

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Question added by AFZAN WASIM , STORE EXECUTIVE , AL ROSTAMANI TRADING COMPANY
Date Posted: 2014/10/12
Muhammad Anwar
by Muhammad Anwar , Technical Support Officer , Fusion For Energy

It depends on you how you want to calculate it,

It can be Weekly, Monthly & Yearly, no specific scale of time but most companies prefer Yearly because it provides you with a clear picture of how well you Inventory is doing.

Norman Macdonald
by Norman Macdonald , Project Manager/Team Coach , Ziphi Nkomo contracted to Shoprite Group of Companies

Stock turnover time period is the calculation of how quickly stock moves. The trick is to try and sell the stock as many times as possible without risking "out of stock" situations before you pay the vendor. The short reference to this is "TURNS". How many time do you turn stock in a year.

In FMCG retail a good average goal will be to acheive20 Turns And is calculated as follows...

Snapshot of Stock on Hand devided by Sales for the week. Compare this figure with divideing it also by an ave Sales per week in order to compare the current week to the ave.

In other words. SOH $4 mil devided by sales of the week of $1,8 mil.

=2.22 weeks stock

=15.55 days stock (x7days)

Turns per year =365 days / by15.55days

=23 Turns per annum

Now high turns are only good if your Service level is95%, meaning you are ialways in stock.

If you pay your vendors say ave30 day of statement  then you will pay vendors +- every45 days and thus (45 /15,55)  you will sell the stock2,89 times before you pay the vendor for the first delivery.

Hany Helmy Haleem
by Hany Helmy Haleem , Director of Warehouses , Nasco Automotive

Mr. Afzan

I think you may ask for inventory turnover and this analysis tools look for the sales by cost divided by the average inventory  by cost in a year.

Average inventory is starting inventory minus final inventory for a year .

Olamide Ibraheem ABIMBOLA
by Olamide Ibraheem ABIMBOLA , Procurement And Logistics Manager , Plan International

Stock turnover period for all inventory depends majorly on average daily shipment/sales and consideration storage capacity with an inventory shelve-life/viability. 

Ahmad Abdulhadi
by Ahmad Abdulhadi , Supply Chain Manager , Al Amin Medical Instruments Co. Ltd., AMICO

It is depend to the stock nature.