Inventory Days Have a Cash Carrying Cost
Connect DIO and inventory turnover to cash trapped in stock and service-level trade-offs.
Inventory protects service, but it also rents your cash. DIO makes stock visible as time Days inventory outstanding converts inventory into the number of days it usually sits before sale or use. A rising DIO means cash is staying in inventory longer. Carrying cost is broader than warehouse rent Inventory consumes working capital and creates storage, handling, insurance, shrink, obsolescence, and markdown risk. The true cost of holding stock is often higher than the visible warehouse line. Segment before cutting Inventory reduction without segmentation creates bad service decisions. Separate fast movers, constrained components, seasonal items, and slow-moving long-tail stock. Release…
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