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In warehouse operation, how to find out the inventory turnover ?

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Question added by Shaik Alavudeen Amanullah , Business Development Executive , Saadi Saad Al Harbi & Partners Company
Date Posted: 2017/04/24
Shaik Alavudeen Amanullah
by Shaik Alavudeen Amanullah , Business Development Executive , Saadi Saad Al Harbi & Partners Company

It can be derived from calculating the ratio of " cost of goods sold for certain period by the average of inventory on same duration".

 

Akila Nanayakkara
by Akila Nanayakkara , Sales And Marketing Coordinator , Milaha(Qatar Navigation)

Inventory turnover in warehouse operations calculated as below.

QTY WISE= TOTAL DISPATCHED UNITS / AVERAGE INVENTORY QTY

VALUE WISE= TOTAL COST OF DELIVERED UNITS / AVERAGE INVENTORY VALUE

TO FIND AVERAGE INVENTORY.

STARTING INVENTORY + ENDING INVENTORY / 2

Saadi Abdallah Mohammad Abdel-Rahim Abdel-Rahim
by Saadi Abdallah Mohammad Abdel-Rahim Abdel-Rahim , Senior Logistics Officer , Oxfam GB

Does Average Inventory = Inventory Turnover  ??

In aperfectly planned set up and over a certain period it should. However, in the real world, there is always a certain acceptable norm of deviation. Also in emergency situations, there is always a large deviation at a certain point in the year even when you try to close the financial year, where one exceeds the other. The better the plan the closer we are to achieve the equation.

As how to calculate the inventory turnover, is by calculatin total deliveries/consumables/sold stock over the average stock inventory during a certain period of time, normally a year.

 

Asif Ali
by Asif Ali , CONTRACTS SUPERVISOR , SONANGOL COMPANY IRAQ

Inventory turnover is a way of measuring how many times a business sells its stock of inventory in a given time period. Businesses use inventory turnover to assess competitiveness, project profits, and generally figure out how well they are doing in their industry. Unlike employee turnover, a high inventory turnover is generally seen as a good thing because this means that goods are sold relatively quickly before they have a chance to deteriorate. Generally, inventory turnover is calculated with the formula Turnover = Cost of Goods Sold (COGS)/Average Inventory.

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