Inventory KPIs: Formulas, Examples and a Weekly Review
By My Inventory Items · Updated
Which inventory KPIs should I track?
Start with inventory turnover for stock efficiency, GMROI for gross profit on inventory investment, sell-through for unit sales progress and order fill rate for availability. Use the same reporting period for comparisons, then investigate the products behind each change.
Worked examples are illustrative calculations, not customer outcomes. Tools use the inputs and definitions shown on their individual pages.
Prepare one consistent reporting dataset
Record the period start and end, SKU, location, opening and closing stock at cost, net sales, COGS, units received, units sold and first-shipment order outcomes. Use one currency and unit per calculation. Reconcile returns, transfers and adjustments before comparing results.
Inventory turnover: how often does stock cycle?
Turnover = period COGS ÷ average inventory at cost. With annual COGS of 120,000 and average inventory of 30,000, turnover is 4 times per year. Days inventory outstanding = days in period ÷ turnover: 365 ÷ 4 = 91.25 days. Use regular inventory snapshots when seasonality makes opening and closing balances unrepresentative.
GMROI: is inventory generating gross profit?
GMROI = (net sales − COGS) ÷ average inventory at cost. Net sales of 150,000, COGS of 90,000 and average inventory of 30,000 give 2.00 for that period. This means 2 in gross profit for each 1 invested in average stock; operating costs are excluded. It is not net profit or a percentage.
Sell-through: what share of available units sold?
For an opening-stock-plus-receipts definition, sell-through = net units sold ÷ (opening units + received units) × 100. Opening units of 100, receipts of 50 and net sales of 90 units give 60%. Keep the definition consistent; a receipts-only denominator answers a different question.
Order fill rate: can stock meet actual orders?
Order fill rate = orders filled completely on the first shipment ÷ total evaluated orders × 100. If 225 of 250 orders ship in full, the rate is 90%. Partial shipments do not count as complete orders. This does not measure on-time delivery.
Turn the report into a weekly action list
Review availability exceptions weekly and efficiency trends over comparable monthly or seasonal periods. For each exception, assign an owner, a cause to investigate, an action and a review date. High turnover with poor fill rate can signal understocking; low turnover with weak GMROI can signal excess investment. Compare similar categories rather than applying a universal target.
Run the calculations
Frequently asked questions
What is a good inventory turnover ratio?
There is no single target for every business. Product shelf life, margin, supplier lead time and seasonality change the appropriate level. Compare the same category and period, while checking fill rate and stockouts.
Can I use sales revenue instead of COGS for turnover?
For the cost-based turnover definition here, use COGS and average inventory at cost. Mixing revenue with a cost denominator produces a different measure and prevents like-for-like comparisons.