Inventory Days Calculator
How many days of demand the stock on hand covers, the capital it ties up, and what reducing it releases — the number a warehouse is judged on.
Days of inventory is stock value divided by daily usage at cost.
How the inventory days calculator works
Days of inventory is stock value divided by daily usage at cost. Sixty days means two months of demand is sitting on shelves, and that stock cost money to buy and costs money to hold — typically 20 to 30% of its value a year in space, capital, insurance and obsolescence.
The reduction rows are the business case: every day removed releases a day of demand in cash, permanently.
Formula: days = stock value / (annual COGS / 365); holding cost = value × rate
Worked examples
| Inputs | Days of inventory | Note |
|---|---|---|
| 480,000 of stock against 2.9 million COGS | 60.41 | 60 days |
| A leaner target | 60.41 | releases a quarter of a million |
| A high holding rate | 60.41 | a bigger saving |
FAQFrequently asked questions
What are days of inventory?
How many days of demand the stock on hand would cover. It is the same information as inventory turns, stated the way a warehouse manager thinks.
What is a good figure?
It depends on the business — a supermarket runs under twenty, a machine builder over ninety. Compare against your own history and your industry.
What is the holding cost rate?
The annual cost of holding a unit of stock as a share of its value: capital, space, insurance, handling, shrinkage and obsolescence. Twenty to thirty per cent is typical.
Why does reducing inventory release cash?
Because the stock was bought with cash. Every day of demand removed from the shelves is a day of purchases that never has to be made again.
Is lower always better?
Until it costs service. Stockouts lose sales and customers; the target is the lowest level that holds the service you have promised.
Where these figures come from
- Nakajima (1988) — Introduction to TPM — the origin of Overall Equipment Effectiveness and its six big losses
- Safe Work Australia — the national work health and safety body
Last checked: September 2026. Definitions follow standard operations-management practice; where plants commonly differ, the page says so.