400. Days of Supply
How many days the current inventory will last at the current consumption rate. The “human-readable” cousin of turnover.
Equivalently:
400.0.1. Definition variants
| Variant | Formula | When to use |
| Unit-based | On-hand units / daily demand units | Single SKU operational view |
| Value-based | Inventory value / daily COGS | Aggregate financial view |
| Forward-looking | Inventory / forecasted daily demand | When demand changes (seasonality, promos) |
The forward-looking version is more accurate for planning; the historical version is simpler and what most reports show.
400.0.2. Why DOS rather than turnover?
Turnover is a ratio (e.g., 12). DOS is a time (e.g., 30 days). Time is more intuitive for operational decisions:
- “We have 45 days of supply” → vivid, actionable.
- “Turnover is 8.1” → harder to feel.
Both convey the same information; just pick the one your stakeholders prefer.
400.0.3. Targets by inventory function
Different functions of inventory imply different DOS targets:
| Function | Typical DOS | Reasoning |
| Cycle stock | Half the cycle length; depends on EOQ | |
| Safety stock | Buffer for service level | |
| Pipeline stock | Lead time itself | |
| Anticipation | varies | Days until peak demand |
Total DOS = sum across functions, comparable to total inventory ÷ daily demand.
400.0.4. Reading DOS distribution
A useful diagnostic: plot DOS by SKU (histogram).
- Tail of high-DOS items (e.g., > 200 days): dead stock candidates. Cross-reference with FSN — these are usually N-class (non-moving) items.
- Spike at low DOS (e.g., < 7 days): chronically understocked. Check stockout rate.
- Healthy bulk: cluster around the target DOS for the policy.
The aggregate company DOS hides this distribution — it’s the average. Plot it.
400.0.5. DOS vs lead time
Compare DOS to lead time:
- DOS < : high stockout risk. The next order won’t arrive before current stock runs out.
- DOS = : no buffer. Razor-thin operations.
- DOS > : have at least lead-time coverage; safety stock + cycle stock above .
Healthy operations target to , with the excess coming from cycle stock and modest safety stock.
Example
Given:
- Average inventory: 880 units (cycle 388 + safety 30 + pipeline 462)
- Daily demand: 33 units / day
- Lead time: 14 days
Step 1 — total DOS
Equivalent to turnover of .
Step 2 — DOS by component
- Cycle stock: days
- Safety stock: day
- Pipeline: days (= )
- Total: days ✓
Step 3 — sanity check
- Lead time = 14 days. DOS = 27 days. Buffer above lead time: 13 days (cycle + safety).
- Comfortable margin. No risk of stockout from running out before next order arrives.
Step 4 — flag analysis
Suppose another SKU shows DOS = 8 days with days. DOS < L: that SKU is in trouble. The next replenishment can’t arrive before current stock runs out. Stockout incoming.
Action: increase safety stock, reduce for faster reorder, or expedite the inbound shipment.
Step 5 — flag dead stock
Suppose another SKU shows DOS = 365 days. That’s a year of supply on hand. Almost certainly dead stock or vastly overstocked. Action: investigate; cross-check with FSN.
DOS is the diagnostic; FSN, ABC, and stockout rate are the follow-ups.