Parts and inventory
Inventory turnover calculator
Inventory turnover is how many times you consume and replace the value of your storeroom in a year. In MRO it is low by design, because you hold critical spares precisely so they sit there. A very low figure usually means dead stock rather than prudence.
Inventory turnover = Value of parts consumed ÷ Average inventory value
Over the period, usually a year
Average of opening and closing value, or a monthly average
Show the assumptions
- Formula
- Inventory turnover = Value of parts consumed ÷ Average inventory value
Turnover on its own can be improved by refusing to stock anything, which is why it should never be a target by itself. Read it with stockout rate: high turnover and frequent stockouts is a worse position than low turnover and none.
Inventory turnover
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Prefilled with an example. Change any number and the result updates.
How to calculate Inventory turnover
Inventory turnover = Value of parts consumed ÷ Average inventory value
Worked example
- Value of parts consumed $900,000
- Average inventory value $450,000
Inventory turnover = 2.00 turns
Reading the result
Turnover on its own can be improved by refusing to stock anything, which is why it should never be a target by itself. Read it with stockout rate: high turnover and frequent stockouts is a worse position than low turnover and none.
Benchmarks
Two to four turns a year is the range commonly cited for MRO storerooms, well below the figures normal in finished goods. Critical spares deliberately drag it down.
Inventory turnover questions
Why is MRO turnover so much lower than production inventory?
Because a good part of the storeroom exists as insurance. A spare motor held against a failure that may not come for five years is doing its job by gathering dust, and no turnover figure will make that look efficient.
How do I find dead stock?
Look at items with no issues for 24 months, then check each against asset criticality before writing anything off. The ones attached to equipment you no longer own are the easy wins. The ones attached to a critical asset with a long lead time are exactly what you meant to keep.
Related calculators
See parts usage by asset
UpKeep records the work, the hours and the failures this metric depends on, so Inventory turnover is a report rather than a spreadsheet exercise.