Supply Chain & Procurement worked example

Inventory Turnover with annual cost of goods sold of 6,000,000 $: a worked example

Push annual cost of goods sold up to 6,000,000 $ and the picture changes. This example computes every intermediate figure at that operating point. Use it to judge how hard inventory is working in Supply Chain & Procurement.

The inputs for this scenario

  • Annual cost of goods sold: 6,000,000 $ (raised for this scenario; the documented default is 2,400,000)
  • Average inventory value: 300,000 $ (unchanged)
  • Normalization factor: 1 x (unchanged)

Working through the calculation

  • Applying the documented formula (Inventory turnover = annual COGS ÷ average inventory × normalization factor) to the inputs above produces each figure below.
  • At this operating point the engine returns 20 turns for inventory turnover, the number this scenario is built around.
  • At this operating point the engine returns 20 value for raw ratio.
  • At this operating point the engine returns 1 x for conversion factor.
  • At this operating point the engine returns 300,000 value for denominator.

How this compares with the baseline

  • Against the tool's baseline example, where annual cost of goods sold sits at 2,400,000 $ and the headline result is 8 turns, this scenario comes in 150% above the baseline at 20 turns.
  • It computes inventory turnover as annual COGS divided by average inventory, scaled by a normalization factor, and converts the result to days of supply. The value of this scenario is the size of the gap it exposes: that gap, priced out over a year, is the budget you can justify spending to close it.

Results at a glance

  • Inventory turnover: 20 turns (headline result)
  • Raw ratio: 20 value
  • Conversion factor: 1 x
  • Denominator: 300,000 value

Run it with your numbers

  • Every input above is editable in the live Inventory Turnover calculator, which recalculates instantly and can be shared with the inputs intact.

Last reviewed 2026-05-12.