What is the average inventory?
Average inventory is a type of calculation that allows you to compare stocks from two different periods and determine the mean or diameter between the two. The aim is to use this diameter to determine whether the inventory remains relatively constant over time or whether some factors that have caused the shift in the inventory up or down may be present. Purchase agents and supply officials often use this approach as a means of driving a supplier chain in the structure of the company, thus preventing situations such as unnecessarily high inventory or one that is likely to be so slim that it cannot properly support the operation.
The idea of an average inventory can be used in two different ways. One approach is to focus on the monetary value of the inventory itself. In this application, the total inventory value is averaged from two specified data to see if this inventory remains to an acceptable extent. For example, and the time of time can note that the total inventory value has reached 1a million USD US dollars to the $ 31 December, while the value of stocks for the previous year at the same date was $ 1.2 million. This would leave the average between two data of $ 1.1 million, indicating that the overall chance between the two periods was relatively close and probably to an acceptable extent.
The second approach to the average inventory focuses more on the actual units of the item than on the monetary value. Here is the idea of specifying whether something has changed into a use that requires a change in the way the item is ordered. For example, if the average between the number of units at hand for the same data in two consecutive years suggests a great scattering, this would cause an investigation why this change occurred. In some cases this may mean this item this item is no longer needed so often and you need to revise any permanent or recurring orders for the item,to avoid increasing the number of stocks.
As a tool that helps manage supplies, average access to stocks provides benefits that confirm that current order management processes and supplies meet the needs of the company, or changes before inventory and result in additional tax burden for the company or become underestimated and threatened. By using the average stock calculation, along with other supply management strategies, it is possible to maintain stocks on the right path and make sure the company has what it needs and how these items are required.