Last updated on 2024年5月24日

How do you calculate days of supply in manufacturing?

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Days of supply (DOS) is a key metric that measures how long your inventory can last based on your current demand. It helps you optimize your production planning, avoid stockouts or overstocking, and improve your cash flow and customer satisfaction. In this article, you will learn how to calculate days of supply in manufacturing using a simple formula and some examples.

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Henning Dahl Nielsen

Innovative hygienic design for food processing and packaging systems, Certified machine leveling feet and waterproof…
Andrew Shvydkov

Maintenance Electrician at Molson Coors
Rauno Kalevi

After Sales a.k.a Customes Care professional

1 What is days of supply?

Days of supply is the number of days that your inventory can cover your sales or usage at a given point in time. It is calculated by dividing your inventory level by your average daily demand. For example, if you have 500 units of inventory and your average daily demand is 50 units, your days of supply is 10 days. This means that you can meet your demand for 10 days without replenishing your inventory.

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Henning Dahl Nielsen

Innovative hygienic design for food processing and packaging systems, Certified machine leveling feet and waterproof bearings units, Sustainable development, Responsible growth, Strategy development and execution.
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To calculate days of supply in manufacturing, divide the current inventory level by the average daily usage rate of the product. Days of Supply = (Current Inventory Level) / (Average Daily Usage Rate). This formula gives you the number of days your current inventory will last based on average daily demand. Accurate average daily usage rates are crucial for this calculation, so consider seasonal variations or trends in demand. This metric helps in planning production schedules and inventory management to ensure you meet customer demand without overstocking.

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Scott Damast

Making Chinese Manufacturing and Shipping Seamless for American Businesses | President at MGD Solutions
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Keep in mind that seasonal demand can really affect this calculation. For example the 4th quarter could have double the sales of the first quarter. So when calculating your days of supply it's best to try to learn that number for different times of the year. Even the best inventory planners have trouble getting it right. Watch your sales and inventory carefully each year and try to log the information so that over time you can try to improve your estimated days of supply for each time of year.

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2 Why is days of supply important?

Days of supply is important because it helps you monitor your inventory performance and plan your production schedule. By knowing how long your inventory can last, you can avoid running out of stock or having too much inventory that ties up your cash and storage space. You can also adjust your production frequency and quantity according to your demand fluctuations and lead times. A low days of supply indicates that you have a high inventory turnover and a high customer demand, but it also increases the risk of stockouts and lost sales. A high days of supply indicates that you have a low inventory turnover and a low customer demand, but it also increases the cost of holding and managing inventory.

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3 How to calculate days of supply?

To calculate days of supply, you need to know two variables: your inventory level and your average daily demand. Your inventory level is the amount of inventory that you have on hand at a given date. It can be measured in units, weight, volume, or value. Your average daily demand is the average amount of inventory that you sell or use per day. It can be calculated by dividing your total sales or usage for a period by the number of days in that period. For example, if you sold 1,000 units in 20 days, your average daily demand is 50 units. The formula for days of supply is: DOS = Inventory level / Average daily demand

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Andrew Shvydkov

Maintenance Electrician at Molson Coors
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To calculate days of supply in manufacturing, use this formula: Days of Supply = (Ending Inventory / Average Daily Usage) Where: - Ending Inventory: The amount of inventory on hand at the end of a specified period. - Average Daily Usage: The average amount of inventory used per day during that period. This calculation helps in understanding how many days a certain amount of inventory will last based on average daily usage.

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4 How to interpret days of supply?

The interpretation of days of supply depends on your industry, product, and business goals. There is no universal optimal value for days of supply, as different products have different demand patterns, shelf lives, and lead times. Generally, you want to have a days of supply that matches your customer expectations and minimizes your inventory costs. A low days of supply means that you have a lean inventory system that reduces your holding and obsolescence costs, but it also requires a reliable and responsive supply chain that can replenish your inventory quickly and accurately. A high days of supply means that you have a buffer inventory system that protects you from demand uncertainty and supply disruptions, but it also increases your carrying and opportunity costs. You can use benchmarking, forecasting, and inventory optimization techniques to find the best balance for your days of supply.

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5 How to improve days of supply?

To improve your days of supply, you need to align your inventory management with your demand management. You can use various methods to increase accuracy, reduce lead times, and balance levels. Implement a periodic or perpetual inventory system that tracks movements and updates records regularly. An inventory management software can automate calculations, alerts, and reports. An inventory classification system such as ABC analysis prioritizes items based on value, demand, and risk. Adopt an inventory replenishment system such as EOQ, reorder point, or safety stock to determine the optimal quantity and timing of orders. A demand forecasting system such as historical, causal, or qualitative methods can predict future demand based on various factors and trends. And a production planning system such as MRP, MPS, or JIT can schedule production activities based on demand and inventory levels.

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Rauno Kalevi

After Sales a.k.a Customes Care professional
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When Nokia Mobile phones was a market leader, it was able to force component suppliers so that components were suppliers' property untill transferred to Nokia production line. Components were stored at DHL warehouse just one door away... So if I remember right, the calculated DoS was -3 days as best...

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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How do you calculate days of supply in manufacturing?

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3

4

5

6

1 What is days of supply?

2 Why is days of supply important?

3 How to calculate days of supply?

4 How to interpret days of supply?

5 How to improve days of supply?

6 Here’s what else to consider

Manufacturing

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How do you calculate days of supply in manufacturing?

1

2

3

4

5

6

1 What is days of supply?

2 Why is days of supply important?

3 How to calculate days of supply?

4 How to interpret days of supply?

5 How to improve days of supply?

6 Here’s what else to consider

Manufacturing

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