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Days of WIP Inventory Days of Inventory 51220 3 {{{keywords}}} {{{description}}}
AE122
Days of WIP Inventory
Days of WIP Inventory measures the average number of days of inventory the company holds on its books that have been classified as WIP inventory.
Calculation
| Days of WIP Inventory | ||||
| = |
| |||
where:
- Work-in-Process Inventory = Average Work-in-Process Inventory during the year (the average of beginning and year-end WIP inventories). Work-in-Process inventory includes Unrestricted, Restricted and Blocked WIP inventories.
- Cost of Goods Sold = Annual Cost of Goods Sold
Unit of measure: days (Calendar days)
Alternative names include: Inventory WIP Days of Supply. See also: WIP Inventory Turns.
Notes
Days of WIP 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 |
| AE122 | Days of WIP Inventory | 3 | AE122 |
| AE1221 | Work-in-Process Inventory - Unrestricted | 4 | AE1221 |
| AE1222 | Work-in-Process Inventory - Restricted | 4 | AE1222 |
| AE1223 | Work-in-Process Inventory - Blocked | 4 | AE1223 |
Process(es)
| ID | Name | Level | x |
|---|---|---|---|
| M101 | Create Schedule | 3 | M101 |
| M104 | Inspect | 3 | M104 |
| M202 | Schedule Make Orders | 3 | M202 |
| M203 | Issue Materials | 3 | M203 |
| M204 | Produce | 3 | M204 |
| M205 | Inspect | 3 | M205 |
| M303 | Schedule Resources | 3 | M303 |
| M304 | Issue Resources | 3 | M304 |
| M305 | Produce | 3 | M305 |
| M306 | Inspect | 3 | M306 |
| M407 | Inspect | 3 | M407 |