- Days in inventory shows how many days your stock takes to sell, on average. It is also called days sales of inventory (DSI) or inventory days.
- The formula is (Average Inventory ÷ COGS) × 365. For a shorter period, use the number of days in that period instead of 365.
- With $100,000 of average inventory and $600,000 of COGS, stock takes about 61 days to sell.
- To bring the number down, forecast demand by style and order in smaller batches. Replenish your winners first, and keep bestsellers in stock.
Key Takeaway
The days in inventory formula with a worked example, how it differs from days of supply, and five ways to bring the number down.
A business can have strong sales and still run short of cash, because the money is sitting on shelves. Days in inventory shows how long it sits there.
You will also see it called days sales of inventory (DSI), days inventory outstanding (DIO), or stock days. All of them measure how many days it takes to sell the stock you hold.
This guide walks through the formula with a worked example and explains how it differs from days of supply. It also covers why the number matters and five ways to bring it down. The examples come from fashion, but the formula works for any product.
What Is Days in Inventory?
Days in inventory is the average number of days it takes to sell your stock over a given period. It answers a simple question: how long does stock sit before it sells?
A lower number means stock moves faster, which usually points to tight buying and good demand planning. A higher number can point to overstock or weak demand forecasts. Lower is not always better, though, because a number that is too low can mean you are running out of stock.
What counts as healthy depends on the category. Fresh food sells in days, while a luxury watch may sit for months. Compare your number with your own history and with similar products. It is also closely linked to inventory turnover, and the two are different views of the same data.
Days in Inventory Formula
Days in Inventory = (Average Inventory ÷ COGS) × 365
Here is what each part means:
- Average Inventory = (Beginning Inventory + Ending Inventory) ÷ 2. Our guide to the average inventory formula also covers the multi-period version.
- COGS (cost of goods sold) is the cost of the products you sold in the same period.
- 365 is the number of days in a year. For a quarter, use the number of days in that quarter, such as 90.
Days in inventory also equals 365 ÷ the inventory turnover ratio, so you can work it out from either number. Some businesses use ending inventory instead of average inventory. That is simpler, but it can mislead when stock swings a lot, so pick one method and stay with it.
How to Calculate Days in Inventory, Step by Step
Take a fashion brand that sells seasonal collections. Over the last year, it recorded these numbers:
- Beginning inventory: $120,000
- Ending inventory: $80,000
- COGS: $600,000
Step 1: Find Average Inventory
Average Inventory = ($120,000 + $80,000) ÷ 2 = $100,000
Step 2: Apply the Formula
Days in Inventory = ($100,000 ÷ $600,000) × 365 ≈ 60.8 days
The brand takes about 61 days to sell through its average stock. As a check, turnover is $600,000 ÷ $100,000 = 6, and 365 ÷ 6 gives the same 61 days.
Days in Inventory vs. Days of Supply
The two terms sound alike, but they look in opposite directions. Days in inventory looks back at the past period, using COGS to show how long stock took to sell. Days of supply looks ahead, showing how long your current stock will last at today's rate of sales.
Days of Supply = Current Inventory ÷ Average Daily Demand
Weeks of supply, also called weeks on hand, uses weekly sales instead: Current Inventory ÷ Average Weekly Sales. Say you hold 1,200 units and sell 40 a day. That gives 1,200 ÷ 40 = 30 days of supply, or about 4.3 weeks (1,200 ÷ 280 units a week).
Compare it with your supplier lead time. If you have 30 days of supply and the lead time is 45 days, the order should already be placed. The reorder point formula and the replenishment quantity formula cover the next step.
Why Days in Inventory Matters
It shows how much cash is tied up. Stock that sits unsold cannot fund marketing or new collections. A brand holding 90 days of stock has far more money locked up than one holding 40.
It also signals markdown risk. In fashion, a style can fall out of favour within weeks. Stock that sits too long usually ends up on sale, so cutting days in inventory means fewer clearance discounts and better margins.
Holding costs rise with time as well. Storage costs and the risk of damage or obsolescence grow the longer stock sits. Lenders and investors also watch the number, because a lower figure suggests a business that buys in line with demand.
How to Reduce Days in Inventory
These five steps lower the number without leaving shelves empty.
1. Forecast Demand at Style Level
Use sales history and seasonal patterns to forecast by style, not only by category. Better forecasts mean you buy closer to what will sell. Our guides to demand forecasting and inventory forecasting models explain how.
2. Order Smaller Batches More Often
One large seasonal buy looks cheaper per unit but often ends in dead stock. Smaller, more frequent orders let you test what sells and restock only the winners. Limited capsule drops work the same way, because they reduce the risk of overproducing a style that falls out of trend.
3. Replenish Winners First
Do not reorder everything equally. Set rules so that styles with strong sales speed or margin are replenished first, and review them weekly. The guide to automated replenishment systems shows how those rules can run on their own.
4. Clear Slow Movers Early
Run aging reports and act before a style becomes dead stock. You can mark it down, or move it to a store where it sells better. The inventory KPIs guide explains how to track aging.
5. Track Stock by Size, Colour, and Location
A spreadsheet cannot keep up once the range grows. Use a system that tracks every size and colour at each location in real time, and flags dead stock. Our guide to fashion inventory management covers what to look for.
Do not push the number too low, because that can cause stockouts on bestsellers. Watch fill rate and stockout rate alongside it.
How Supplymint Helps with Days in Inventory
Days in inventory falls when you buy closer to demand, send stock where it sells, and clear slow movers early. Supplymint supports each step.
- The demand and OTB planning module forecasts with AI that weighs seasonality, weather, past sales, planned markdowns, and closing inventory.
- ML-based replenishment sends stock to stores using actual sales data, so fast sellers get topped up first.
- The system suggests transfers between stores for non-performing and aged stock.
- The warehouse management system keeps counts accurate with barcode and RFID-backed tracking and cycle-count variance detection.
If you'd like to see how this works on your own stores and SKUs, book a demo with Supplymint.
