Inventory Performance Measures
Inventory performance measures include financial, productivity, quality, and response time indicators for evaluating the efficiency and effectiveness of inventory management. The indicators include:
Financial Performance Indicators
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Average Inventory Value ( AIV )
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Inventory to Sales Ratio ( ISR )
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Inventory Carrying Cost ( ICC )
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Return on Inventory ( ROI )
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Total Inventory Costthe sum of inventory carrying costs and the administrative cost of managing inventory ( TIC )
Productivity Performance Indicators
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Inventory Planner Productivitythe ratio of the output of a resource to the consumption of the resource
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Inventory Planner Effectiveness
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Days on Hand ( DOH days on-hand)
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Leadtimes on Hand
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Inventory Turnover(1) the number of times inventory turns each year, typically expressed as the ratio of annual sales at cost to average inventory value (2) (Sales divided by Average Inventory at Retail) OR (Cost of Goods Sold divided by Average Inventory at Cost) (3) financial ratio which measures velocity or how often (theoretically) entire inventory is sold and replaced within a given period of time (sometimes referred to as inventory turn rate, inventory turn ratio, or turns) ( IT )
Quality Performance Indicators
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Fill RateThe generic definition is the portion of customer demand satisfiable from on-hand stock. Fill rate can be monitored in different units of measure including unit fill rate (UFR), line fill rate (LFR), and order fill rate (OFR). Fill rate can also be measured in the context of time - initial fill rate (IFR), one-day fill rate (1DFR), two-day fill rate (2DFR)... secondary fill rate (SFR), and final fill rate (FFR).
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Inventory Performance Index ( IPI )
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Forecast Accuracy
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Forecast Bias %
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Warehouse Occupancy %
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Inventory Accuracy ( IA )
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Inventory Quality Ratio ( IQR )
Response Time Performance Indicators