Key Performance Statistics

Average Daily Inventory:

Average Daily Inventory is the average quantity on hand in inventory at the end of each day, after
adjustment for all the day’s transactional activities. By averaging inventory quantities over an
entire period, retailers get a truer picture of inventory than from a single snapshot, such as onhand quantities at the end of the period.

Knowing the average daily inventory helps retailers:

• Determine correct min/max levels
• Decide how often reorders will be necessary
• Calculate Turn and other performance statistics

TurnTurn (also called Turnover) is a measure of how fast you are moving items through the door to
customers. The advantages of having a high Turn rate include:

1.  Increased sales volume Fresh merchandise sells better and faster than old, shopworn merchandise.
2. Less risk of obsolete stock and markdowns When inventory is selling quickly,merchandise isn't in the store long enough to become obsolete. As a result, markdowns are reduced and gross margins increase.
3. More money for market opportunities When Turn is high, money previously tied up in inventory is freed to buy more merchandise.
4. Decreased operating expenses An increase in Turn may mean that a lower level of inventory is supporting the same level of sales, which translates to lower inventory carrying costs. \

However, an excessively high Turn rate can hurt retailers in the following ways:

1. Lowered sales volume If customers can’t find the size or color they seek—or even
   worse, if they can’t find the product line at all—a sale is lost.
2. Increased cost of goods sold By buying smaller quantities, the buyer can’t take
   advantage of quantity and freight discounts.
3.  Increased operating expenses A buyer spends about the same amount of time meeting
   with vendors and writing orders whether the order is large or small. It also takes about the
   same amount of time, for both large and small orders, to print invoices, receive
   merchandise, and pay invoices.