1. What is Months of Stock?

Months of Stock is a key inventory management metric that calculates how long current inventory levels will last based on average sales rates. It helps businesses optimize inventory levels and avoid stockouts or overstocking.

2. How Does the Calculator Work?

The calculator uses the Months of Stock formula:

Where:

• \( \text{Ending Inventory} \) — Current inventory level in units
• \( \text{Average Monthly Sales} \) — Average sales per month in units

Explanation: This ratio indicates how many months the current inventory will last at the current sales rate, helping with inventory planning and purchasing decisions.

3. Importance of Inventory Management

Details: Proper inventory management ensures optimal stock levels, reduces carrying costs, prevents stockouts, improves cash flow, and enhances customer satisfaction through better product availability.

4. Using the Calculator

Tips: Enter ending inventory in units and average monthly sales in units per month. Both values must be positive numbers. Use recent sales data for accurate calculations.

5. Frequently Asked Questions (FAQ)

Q1: What is a good Months of Stock value?
A: Ideal values vary by industry, but generally 1-3 months is considered optimal. Too high indicates overstocking, too low risks stockouts.

Q2: How often should I calculate Months of Stock?
A: Monthly calculation is recommended to track trends and make timely inventory adjustments based on changing sales patterns.

Q3: What if my sales are seasonal?
A: For seasonal businesses, use rolling averages or calculate separately for peak and off-peak seasons to get more accurate results.

Q4: How does this differ from Days of Inventory?
A: Days of Inventory shows coverage in days, while Months of Stock shows coverage in months. Convert by multiplying months by 30.44 (average days per month).

Q5: Should I include all inventory types?
A: Include only sellable inventory. Exclude damaged, obsolete, or reserved stock for accurate inventory coverage calculations.