Which statement correctly describes Days of Supply?

Which statement correctly describes Days of Supply?

• A. Days on Hand measures the number of days it takes to turn the inventory.
• B. ITOR measures the number of days it takes to turn over inventory.
• C. E-Procurement measures the speed of online purchasing.
• D. Days of Supply measures the average time (in days) it takes to sell the entire inventory.

Answer: (D)

Days of Supply tells you how long your current stock will last at the present pace of sales or consumption. It translates the size of your on-hand inventory into a time frame by looking at how many units you use each day. Practically, you’d calculate it as the on-hand inventory divided by the average daily usage. For example, if you have 600 units on hand and you’re selling 30 units per day on average, the days of supply is 600 divided by 30, which equals 20 days. This metric helps you plan purchases and prevent stockouts; when days of supply is low, you’d consider replenishing. It differs from inventory turnover (the rate at which inventory cycles through), and from terms like e-procurement or “days on hand,” which focus on different aspects of stock or procurement speed.

Days of Supply tells you how long your current stock will last at the present pace of sales or consumption. It translates the size of your on-hand inventory into a time frame by looking at how many units you use each day. Practically, you’d calculate it as the on-hand inventory divided by the average daily usage. For example, if you have 600 units on hand and you’re selling 30 units per day on average, the days of supply is 600 divided by 30, which equals 20 days. This metric helps you plan purchases and prevent stockouts; when days of supply is low, you’d consider replenishing. It differs from inventory turnover (the rate at which inventory cycles through), and from terms like e-procurement or “days on hand,” which focus on different aspects of stock or procurement speed.