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Days of Raw Materials Inventory Days of Inventory 51210 3 {{{keywords}}} {{{description}}}
AE121
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Latest revision as of 14:48, 10 June 2017
Days of Raw Materials Inventory measures the number of days worth of inventory the company holds on its books that have a RM status.
Contents
Calculation
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where:
- Raw Materials Inventory = Average Raw Materials Inventory (= average of beginning and ending inventories). Raw Materials inventory includes Unrestricted, Restricted and Blocked RM inventories.
- Raw Material Purchases = Total annual RM purchases
Unit of measure: days (Calendar days)
Alternative names include: Inventory Days of Supply Raw Materials. See also: Raw Materials Inventory Turns.
Notes
Days of Raw Materials Inventory may be calculated using value or volume. Value-based is preferred as AE focuses on the efficient use of capital. Volume-based calculations may overstate the importance of inventories of low-value materials.
Community Importance Rating: Hierarchy
| ID | Name | Level | x |
|---|---|---|---|
| AE12 | Days of Inventory | 2 | AE12 |
| AE121 | Days of Raw Materials Inventory | 3 | AE121 |
| AE1211 | Raw Material Inventory - Unrestricted | 4 | AE1211 |
| AE1212 | Raw Material Inventory - Restricted | 4 | AE1212 |
| AE1213 | Raw Material Inventory - Blocked | 4 | AE1213 |