Average Inventory Calculator
Compute average inventory over a period so you can plug it into turnover, EOQ, and working-capital analysis.
These tools are provided for educational and operational guidance only. Results are estimates and may not reflect all factors in your business. Always review calculations and use your own professional judgement before making decisions.
What is this tool?
This calculator gives you a quick estimate of the typical inventory level over a period using beginning and ending balances. It is a common input for metrics like inventory turnover and for simple cash-flow and carrying-cost analysis.
Formula
The most common approximation is:
Average inventory = (Beginning inventory + Ending inventory) ÷ 2
In more detailed analysis you might use monthly or weekly balances, but this simple version is often enough for quick decisions and comparisons.
Example
If beginning inventory is 20,000 and ending inventory is 30,000:
Average inventory = (20,000 + 30,000) ÷ 2 = 25,000.
You can then use 25,000 as the denominator in your inventory turnover calculation or when estimating holding costs.
When should you use this tool?
- When preparing inventory turnover or days-on-hand metrics.
- When running quick what‑if scenarios on how policy changes affect average stock.
- When discussing inventory levels with finance or investors in a simple, transparent way.
- When comparing different product lines or warehouses on inventory intensity.
How this tool helps your business
- Provides a consistent, easy-to-calc input for multiple inventory KPIs.
- Helps you connect EOQ and replenishment policies to average stock levels.
- Makes the cash tied up in inventory more visible for planning and negotiation.
- Supports conversations about reducing working capital without harming service.
Related tools
- Inventory Turnover Calculator – use the average inventory result directly in the turnover formula.
- EOQ Calculator – check how EOQ-based policies influence average inventory levels.
- Inventory Holding Cost Calculator – convert your average inventory into yearly carrying cost.
Frequently Asked Questions
Can I use more than two inventory points?
This tool uses the simple two-point average. For more precise analysis you can average monthly or weekly balances, but this approximation is often enough for quick KPIs.
Should I use units or value?
You can use either, depending on the metric you want. Use units when linking to operational decisions and value when working with financial ratios and holding costs.
How does this relate to EOQ and safety stock?
EOQ and safety-stock policies determine how inventory fluctuates. The average inventory here captures the typical level under those policies and feeds into turnover and cost metrics.
How often should I recalculate average inventory?
At least once per reporting period (month, quarter, year), and whenever you make major changes in assortment or replenishment policies.