Growth, Product Lines and Realistic Inventory Turns

Abstract

In comparing results across organisations, inventory turnovers often provide a simple, useful and pragmatic utilisation measure of this working asset. Managers, however, must take into account differences such as size and product lines to interpret safely comparisons. In this paper a simple model relates turnover to volume and the breadth of product lines. Several case histories are presented to show how managers can develop meaningful turnover targets to adjust for these differences.