![]() I once had a customer who bragged about their inventory turns of 220 (basically daily turns), but then I saw their Inventory of purchased motors. (which is typically hidden in a pure Inventory report.) Also, in an MTO world, you have to be careful because inventory “Should” include WIP value. if you ignore total inventory of raw materials, and look only at the finished goods, their turns would be incredibly high (good) becuase nothing is ever in stock. I can see how Distribution companies would/could have a different measurement than manufacturing companies… But, I know of multiple manufacturing companies where they have a small number of finished goods parts that actually ship (fixed asset companies) but MANY raw materials that make up their inventory. this 4th example is fairly easy to do with a BAQ… calculating for a year would take a more more complicated, and in reality needs to have a table (executive query table?) that captures the month end inventory numbers each month, so that you could get the “average monthly value of inventory”. So… if you always build up inventory to the same value as you sell each month, then you will have 12 turns, because you build the inventory, then sell it.īut, if at the end of each month, you always have enough inventory to sell for one year, then you only have one turn.īelow is a screenshot of attached spreadsheet that you can use to do some playing… the first three tables show various examples of 12 turns, 1 turn, and 144 turns… the 4th table shows how you can theoretically calculate turns using only one months worth of data… you can do this by taking COGS for the month, Multiplying by 12 (to extrapolate Yearly turns) and then dividing that by the month end inventory. Here is the way that I have always understood Turns… it is the Number of times that you turn over inventory during a set period.
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