1. What is Months Supply of Parts Inventory?

The Months Supply calculation determines how long your current inventory will last based on average monthly usage. This metric is crucial for inventory management, helping businesses plan purchases and avoid stockouts or overstocking.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• \( \text{Current Inventory} \) — Total units currently in stock
• \( \text{Average Monthly Usage} \) — Average units consumed per month
• \( \text{Months Supply} \) — Estimated duration inventory will last (months)

Explanation: This calculation provides a straightforward estimate of inventory coverage, helping businesses maintain optimal stock levels.

3. Importance of Inventory Coverage Calculation

Details: Knowing your months supply helps prevent stockouts that can disrupt operations, while also avoiding excessive inventory that ties up capital and increases storage costs.

4. Using the Calculator

Tips: Enter current inventory in units and average monthly usage in units per month. Both values must be positive numbers, with monthly usage greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: What is considered a good months supply value?
A: This varies by industry and part criticality, but typically 1-3 months supply is optimal for most businesses.

Q2: How should I calculate average monthly usage?
A: Use historical data from the past 6-12 months, adjusting for seasonal trends and business growth projections.

Q3: What if my monthly usage varies significantly?
A: Consider using weighted averages or separate calculations for peak and off-peak seasons to get more accurate estimates.

Q4: Should I include safety stock in this calculation?
A: This calculation shows total inventory coverage. For reorder planning, subtract safety stock from current inventory first.

Q5: How often should I recalculate months supply?
A: Monthly recalculations are recommended, especially for fast-moving items or during periods of business change.