Inventory Turnover
Inventory turnover measures how often inventory value is used or replaced during a defined period.
What this term means in maintenance
Inventory turnover measures how often inventory value is used or replaced during a defined period.
Basic formula
Inventory turnover = Annual inventory usage value ÷ Average inventory value
Practical example
A maintenance store issues 1,000,000 in parts during the year and holds an average inventory value of 500,000.
Turnover = 2 times per year
Interpretation
Low turnover may indicate excess or obsolete stock, but some critical spares are intentionally held for long periods.
Maintenance context
Review turnover together with:
- Criticality
- Stockouts
- Lead time
- Service level
- Dead stock
- Asset support need
Common mistake
Trying to increase turnover by removing slow-moving critical spares can increase equipment downtime risk.
Related concepts
Related maintenance terms
Keep exploring connected CMMS, reliability, and maintenance planning terms.
Dead Stock
Dead stock is inventory with no expected future use because of obsolescence, equipment removal, duplication, damage, or excessive quantity.
Spare Parts Inventory
Spare parts inventory is the controlled stock of replacement components and consumables kept available to support equipment maintenance and reduce avoidable downtime.
ABC Inventory Analysis
ABC inventory analysis classifies stock items into groups according to annual consumption value or another selected importance measure.
Glossary FAQs
- What is inventory turnover?
Annual inventory usage value divided by average inventory value.
- Is higher turnover always better?
No. Critical slow-moving spares may be intentionally held.
- What should be reviewed with turnover?
Stockouts, service level, criticality, dead stock, and lead time.