The average duration of storage provides information about the storage situation. In concrete terms, it describes the period that inventories and capital are tied up in the warehouse on average.
At the same time, the average storage period also shows how many consumption periods an average stock cover. By reducing the average storage period, the profitability of a company can be effectively improved. A shorter storage period means that the stored materials can be converted back into liquid funds more quickly.
The average storage period is calculated from the inventory turnover rate and the number of days in a year.
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