Inventory Calculator
Calculate inventory turnover ratio and days sales of inventory.
Inventory management is one of the largest cost centres for product-based businesses. Carrying too much stock ties up capital and increases storage costs; too little causes stockouts and lost sales. This inventory calculator computes key metrics: Economic Order Quantity (EOQ, the optimal reorder amount), Reorder Point (when to place an order), safety stock, inventory turnover ratio, and days of inventory on hand — the metrics that separate efficient operations from wasteful ones.
📋 How to Use This Calculator
Enter your annual demand (units), ordering cost per order (cost of placing one purchase order), holding cost per unit per year (storage, insurance, capital cost — typically 20–30% of unit value), and lead time (days from order to delivery). The calculator returns EOQ, reorder point, safety stock for your desired service level, and current inventory turnover if you enter current inventory value and COGS.
💡 Key Facts & Information
EOQ formula: √(2 × Annual Demand × Order Cost / Holding Cost per unit). EOQ minimises total inventory costs by balancing ordering frequency against holding costs. Reorder Point = (Average Daily Demand × Lead Time) + Safety Stock. Safety stock = Z × σ(demand) × √(lead time), where Z is the service level z-score (1.65 for 95% service level). Inventory Turnover = COGS / Average Inventory Value. High turnover (8–12×/year for retail, 12–24× for grocery) indicates efficient inventory management. Days Inventory Outstanding = 365 / Inventory Turnover. Indian retail average inventory turnover: 4–6×. E-commerce: 8–15×. Manufacturing: 6–8×.