The average storage period (turnover period) indicates the average period over which goods remain in the warehouse. In addition, the key figure provides information on how many consumption periods are covered by an average stock level. The storage period is based on the company's storage policy and depends on the conditions on the sales and procurement market.
Profitability improves if the storage period can be reduced and the capital commitment is lower as a result. If there is a shorter storage period, the goods can be converted back into cash more quickly.
Calculation of the average storage period
The storage period is calculated by dividing the number of days in the calculation period (year or season) by the inventory turnover rate.
Ø Storage period = 360 days ∗ Ø Stock / annual consumption
Ø storage period = 360days / stock turnover rate