Inventory Turns by Warehouse
 
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Inventory Turns by Warehouse

The Inventory Turns by Warehouse (TURNWHSE) report allows the warehouse manager to track how many times the value of the inventory in his or her warehouse turns over annually. Inventory turns indicate the number of times the total value of an item is transferred out or issued from the warehouse. Inventory turns are important to managing inventory in a warehouse. Using the Inventory Turns by Warehouse (TURNWHSE) report, the warehouse manager can identify excess, obsolete, and slow-moving items. This information can be used when planning replenishment and to avoid over-stock or out-of-stock situations.

Inventory turns are calculated using the average monthly value of the inventory rather than the average monthly quantity of inventory. This allows the warehouse manager to compare inventory turns for items with significantly different values. If quantity were used in the calculation rather than value, inventory turn rates could be misleading. For example, your agency uses computer diskettes frequently; these diskettes have a relatively low value. In contrast, your agency orders computers infrequently; these computers are high in value. If inventory turns were calculated using average quantity, the diskettes would have a much higher turn rate than the computers. However, the method that is currently used for calculating inventory turns takes inventory value into account, thereby allowing items of different value to be compared.

Transaction data from the most recent 12 months is used to calculate inventory turns. To calculate the monthly turn rate, the average monthly on-hand value of the item is divided by the average monthly demand value (consumption history value) of the item. The monthly turn rate is then multiplied by 12 to calculate the annual turn rate.

Avg. Monthly Demand Value        X        12        =        Annual Turn Rate
Avg. monthly On-Hand Value

The annual turn rate is displayed on the Inventory Turns by Warehouse (TURNWHSE) report. For example, a laser computer printer has an average monthly on-hand value of 100 and an average monthly demand value of 100. When the average monthly on-hand value of 100 is divided by the average monthly demand value of 100, the monthly turn rate is one. This means that this item turns over once a month. Multiply this rate by 12 months in one year, and the annual turn rate is 12.

100        X        12        =        12
100

Each item stocked in the warehouse appears on the Inventory Turns by Warehouse (TURNWHSE) report. In addition to displaying the turn rate, the report also displays the following information for each item:

Incorrect data entered in the NCAS can affect the inventory turn rate. Incorrect data can result from inaccurate quantities keyed into the system or an inaccurate dollar value assigned to a transaction. Inventory turns can also be affected by transactions entered on the Direct Issue (DI) and Direct Return (DR) screens. Using the Direct Issue (DI) and Direct Return (DR) screens rather than the Add Inventory Adjustments (AIAU) and Deduct Inventory Adjustments (DIAU) screens to manipulate inventory levels inaccurately updates the usage history for an item. In addition, using the Direct Return (DR) screen to receive inventory items into the system also inaccurately updates the usage history for an item. The inventory turn rate is then affected because inventory turns are calculated using consumption history. The inventory turn rate will be affected for a full year because it takes 12 months for inaccurate data to cycle out of the NCAS.

Because the data on the Inventory Turns by Warehouse (TURNWHSE) report is only updated monthly, the warehouse manager only needs to review the report once a month. The Inventory Turns by Warehouse (TURNWHSE) report is located in RMDS in the report group IN286-1.

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