1. What is Days Supply Calculation?

Days Supply is a key inventory management metric that calculates how long current inventory will last based on current sales rates. In the automotive industry, it helps dealers and manufacturers optimize inventory levels and manage supply chain efficiency.

2. How Does the Calculator Work?

The calculator uses the Days Supply formula:

Where:

• \( \text{Inventory Units} \) — Current number of vehicles in inventory
• \( \text{Sales Units} \) — Annual sales volume (units per year)
• \( 365 \) — Number of days in a year

Explanation: The formula calculates how many days the current inventory will last at the current annual sales rate.

3. Importance of Days Supply in Automotive Industry

Details: Days Supply is crucial for automotive dealers to maintain optimal inventory levels, avoid overstocking or stockouts, manage cash flow, and make informed purchasing decisions.

4. Using the Calculator

Tips: Enter current inventory units and annual sales units. Both values must be positive numbers, with sales units greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: What is an ideal Days Supply for automotive dealers?
A: Typically 60-90 days is considered optimal, though this varies by manufacturer, vehicle type, and market conditions.

Q2: How often should Days Supply be calculated?
A: Most dealers calculate it monthly, but high-volume dealers may calculate it weekly for better inventory management.

Q3: What if I have seasonal sales variations?
A: For seasonal businesses, use rolling 12-month averages or adjust calculations based on seasonal patterns for more accurate results.

Q4: Can this be used for specific vehicle models?
A: Yes, calculating Days Supply by model helps identify which vehicles are selling well and which need promotional attention.

Q5: How does Days Supply affect ordering decisions?
A: Low Days Supply may indicate need for more inventory, while high Days Supply suggests slowing sales or over-ordering.