International Journal of Physical Distribution & Logistics Management

Evaluating inventory management performance using a turnover curve

Ronald H. Ballou
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Ronald H. Ballou, (2000),"Evaluating inventory management performance using a turnover curve",
International Journal of Physical Distribution & Logistics Management, Vol. 30 Iss 1 pp. 72 - 85
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IJPDLM
30,1
72
Received April 1999
Revised September 1999
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International Journal of Physical
Distribution & Logistics
Management, Vol. 30 No. 1, 2000,
pp. 72-85. # MCB University Press,
0960-0035
The current issue and full text archive of this journal is available at
http://www.emerald-library.com
Evaluating inventory
management performance
using a turnover curve
Ronald H. Ballou
Weatherhead School of Management, Case Western Reserve University,
Cleveland, Ohio, USA
Keywords Logistics, Supply chain, Inventory, Warehousing
Abstract Managing inventory levels in the aggregate is a common concern of senior
management. A generalized formula (turnover curve) developed in previous research that mimics
practical inventory control is used to audit inventory control performance of inventories in the
aggregate and at multiple stocking points. The same turnover curve is used to estimate the impact
of changing the inventory control procedures or to set new targets for inventory levels. It is a
simple yet powerful tool for evaluating inventory managerial performance that can be developed
from readily available company data. This research provides additional examples to further
validate the practical usefulness of the turnover curve.
Introduction
Are our inventory policies producing the desired inventory turnover? How
much inventory will there be if we add another warehouse? Or consolidate
inventories into fewer warehouses? What is the inventory investment impact if
we increase our inventory turns? How good is our inventory management
performance? Senior management asks these questions about its inventories.
Since inventories represent a significant investment by many firms, and with
annual carrying costs typically ranging from 20 to 40 percent of inventory
value, managing them well is a top-management priority.
In practice, it is common to apply replenishment rules to manage each item
in inventory at each stocking point. Familiar procedures are economic order
quantity (EOQ) based methods, just-in-time methods such as materials
requirements planning (MRP), or variants of push and pull procedures. (For a
review, see Ballou, 1999, chapter 10.) The application of these methods
produces an overall level of inventory that senior management typically judges
in terms of an inventory turnover ratio (annual sales/average inventory) or a
total asset level. Auditing the overall performance of these policies, or
projecting the effect of a change in the policies, is difficult if there are thousands
of items in inventory at multiple locations and item-level methods are used. In
this article, it is shown that inventory management performance auditing can
be accomplished at the aggregate level by using a formula described as the
turnover curve.
The relationship between average inventory and facility throughput was
first reported by this author in 1981 and will be referred to subsequently as
previous research (Ballou, 1981). At that time, a limited number of independent
 examples were available to determine the accuracy in applying the relationship Evaluating
to actual data. Data were obtained from warehouse location studies, where inventory
estimating inventory level changes with the various numbers of locations was management
important to such analyses. Since then, additional examples have been
collected for a variety of firms from this author's own consulting work and
from a case study reported by the Harvard Business School. These data are
used to further confirm the accuracy of the turnover curve and to illustrate its 73
usefulness beyond location studies, where it seems to have found its greatest
application.

The turnover curve

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It has been shown in the previous research that a formula of the general form
X
N
IT ˆ …w ‡ mDi ‡ aDib † …1†
iˆ1

where
IT = total network inventory, units or $;
Di = annual stocking point throughput at location i, units or $;
N = number of stocking points at which the products are held; and
w; m; a; b = constants to be determined from the particular inventory being
modeled
can be used to estimate the total amount of inventory in a multiple stocking
point network. This formula replicates the inventory-level results of various
inventory policies used in practice. The terms in the equation have the
following general meaning:
w = the average amount of promotional, speculative, obsolete, or production
overrun stock at a stocking point.
mDib = the amount of safety stock at stocking point i.
aDi = the amount of regular stock at stocking point i, but may also represent
some safety stock.
Since the coefficients within the model are determined by fitting the formula to
the inventory turnover ratios at the stocking points in the logistics network, the
formula is referred to as a turnover curve.
Note: The theoretical development of this formula is explained in the
previous research (Ballou, 1981) and is not repeated here. Equation (1)
represents a variety of inventory policies. These policies typically range from
EOQ-based ones (inventory levels increase at a decreasing rate with D) to
stock-to-demand types (inventory levels increase at a linear rate with D and
there is no significant amount of startup stock, i.e., w ( 0). The practical range
of the formula is for b = 0.5 with w = 0 and m = 0 to b = 1 with w = 0 and m = 0.
PN
The levels of well-managed inventories could be expressed as IT ˆ aD1b
with b  0.7, as noted in the previous study. iˆ1
 IJPDLM Although the turnover curve can represent a variety of applied inventory
30,1 policies simply by manipulating the terms in the formula, the forms of the
PN
equation most useful in practice are the linear form, IT ˆ …w ‡ mDi †, where
PN iˆ1
w sometimes may be zero, and the power form, IT ˆ aDib . Where w > 0, the
iˆ1
74 linear and power forms may similarly represent the relationship of inventory
levels to the demand placed on them. Including additional terms of equation (1),
while sometimes offering a better statistical fit, frequently results in difficult
problems of interpretation. They may be used, but are not recommended unless
the meaning can be explained.
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The exponent b to which Di is raised in the power form of the turnover curve
gives insight as to the replenishment rules being used and as to their
performance. When the exponent on Di is 0.5, i.e. Di0:5 , inventories are likely to
be managed based on EOQ principles. This extreme value occurs when no
safety stock is maintained in the system, i.e. cycle stock is dominant, and,
hence, represents the lowest value of b that can be expected. Recall that in the
p
economic order quantity formula (Q ˆ 2DS=H ) the order quantity Q is the
square root of the demand D. Since the average inventory level is Q/2, the
average inventory level is related to D0:5 . (This policy also may be
approximated in equation (1) where w > 0, m > 0, and a = 0.) Consider a
practical example:
A specialty chemical company acquired a computer software package to forecast item sales
and an inventory control package to manage its finished goods inventories in 22 warehouses.
Inventory control was a trigger-point method with item replenishment quantities being
determined by EOQ principles. All warehouses carried the same mix of products, although
slow moving products were held only at plants. The power function of the turnover curve
showed a b = 0.58, which is consistent with the firm's inventory policy.

On the other hand, when the exponent b is 1 in the power form of equation (1),
the stock replenishment rules produce inventory levels in direct proportion to
the stocking point throughput (stock-to-demand policy), such as with a
stocking rule that maintains inventory levels at a given number of days of
demand. Consider the following example:
A cement producer stocks bagged concrete at 18 distribution points (Bodegas) to serve the
demand of construction sites throughout Mexico. The inventory policy is to maintain
inventory at a two-day supply level. From the inventory turnover ratios for these Bodegas, a
linear turnover curve is the best fit with a small intercept value representing a slight
deviation from the general nature of the inventory policy. Actually, 3.6 days of supply was
being maintained.

The directly proportional inventory policy frequently occurs in practice,

probably because it is simple to understand and execute. It may also be
represented in equation (1) where P
w = 0 and aP= 0 leaving the mD term. That is,
equations expressed in the forms mDi and aD1 are the same.
It makes little long-run sense when using the power form of the turnover
curve for b to be greater than 1, since stocking points with high throughputs
 will hold disproportionately more inventory than low throughput points. This Evaluating
situation sometimes occurs in the short run where goods are stocked in inventory
anticipation of demand. For example: management
The military will order goods from manufacturers used to meet demand that occurs over a
future short time span, such as in a military conflict. The supply of these goods moving into
stocking points may span several years. Although stocking levels eventually will be depleted
by demand or product obsolescence, observing inventory levels over the time period of a year 75
will show that they are increasing relative to demand.

However, a b of 1 is the highest practical value to be seen in most commercial

operations since increasing inventory levels relative to demand (b > 1) cannot
be supported indefinitely.
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Previous research (Ballou, 1981) has shown the typical value of b in the
power form to be 0.7 for inventory levels that grow at a decreasing rate with the
amount of demand placed on them. This was determined by averaging the
b values for all the data samples where the inventory-throughput relationship
was best described by a power function. Seven new company examples of the
current study show b to average 0.73. Since the standard deviation is
approximately 0.1, the differences in b values between the two studies is
statistically insignificant. This confirms the earlier result. Thus, a b value of 0.7
is a good average value for what many firms are able to achieve when their
inventory policy is to have stocking levels that increase disproportionately
with demand. It serves as a reference value for what is likely to be achieved
with the execution of EOQ-based inventory policies.

Constructing a turnover curve

Data used in developing a company's turnover curve are generally available.
Stock status reports that show inventory levels and shipping volumes are a
common source. Different curves should be prepared for significantly different
items, but similar items may be classified together and plotted as a group.
Items that are similar would be determined according to the stocking rules
applied to them. For example, only A items of an ABC classification should be
plotted in one graph. There should be at least three stocking points for each
item class, but more is preferred for statistical significance. If data are collected
for time increments of less than a year, say monthly, then inventory levels
should be averaged and throughput should be summed to represent a year.
This averages out seasonal variations and unrepresentative data shifts that can
occur between short time periods. Variability may be reduced by plotting
annual data, but plotting monthly data may, at times, provide better insight as
to the nature of the turnover curve. Care should be taken to separate inventory
according to its function. If a warehouse (or plant) inventory serves local
customers, as well as supplying other warehouses in the network, only that
portion of the stock maintained to serve customers should be included in the
plotted data, assuming that the turnover curve is being constructed for
finished-goods inventories. The types of inventory may be separated by
proportioning the inventory according to the shipments for each.
 IJPDLM To illustrate, consider the inventory of a specialty chemical company that
30,1 produced metal coating chemicals for corrosion prevention. The company sold
to industrial customers in bulk quantities, and in lesser quantities through a
telemarketing program. The smaller-quantity orders were filled through nine
warehouses, whereas the larger orders were supplied from a single plant. The
inventories in the nine locations were managed by an EOQ-based reorder point
76 system. Warehouse stock replenishment orders were filled from the plant.
Plotting the turnover ratios for each warehouse produces Figure 1.
Fitting regression lines of the linear and power forms shows the power form
to have the highest adjusted correlation coefficient. The turnover curve has the
equation of IT ˆ 4:72Di0:611 . The line fit is only moderately good with an
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adjusted correlation coefficient of 0.77, meaning that the execution of the

company's stocking rules is only moderately consistent throughout the
warehousing network. The exponent b = 0.611 in the turnover curve indicates a
strong consolidating effect in the inventories. That is, if the number of stocking
points was reduced, there would be less total inventory than in the original nine
stocking points.

Auditing and inferring with the turnover curve

A primary use of the turnover curve is to audit inventory management
performance. A company may employ well-defined inventory management
rules that are imbedded in computerized inventory control systems, use rules
based on judgment, or apply rules that are a combination of these. Inventory
levels may deviate from those expected based on the rules being applied. The
extent of the deviation will not be known unless an item-by-item analysis is
conducted for each item stocked at each warehouse to establish a benchmark

Figure 1.
Inventory turnover for a
specialty chemical
company's nine
warehouses
 against which current stocking levels may be compared. This analysis can be Evaluating
time consuming and is usually not carried out. The turnover curve is a good inventory
alternative to this evaluation process. management
Several examples are used to illustrate the audit process, with data taken
from actual company files and reports. Each represents an independent and
significantly different situation. The auditing process involves answering
several key questions: 77
. What is the nature of the best curve to fit the turnover data? Linear or
nonlinear?
. What is the value of the exponent b, if the turnover curve is a power
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function? How significant is w, if the turnover curve is a linear function?

. How well is the current inventory management policy being executed?

Example 1
Consider the inventories maintained by the California Fruit Growers, a
disguised name. Products of the company, e.g. dried fruits, were maintained in
24 locations around the country to supply retail outlets. Collecting data on the
annual shipments from these warehouses and the average inventory levels held
in them and then plotting the results gives Figure 2.
The line of best fit is linear with a very low intercept value. Such a turnover
curve indicates that the manner in which inventory levels are controlled is to
set them in direct proportion to the demand on each warehouse. The inventory
stocking policy might well be one where a forecast of the expected demand in a
warehouse territory is made and replenishment quantities are determined by
subtracting the quantity on hand from the forecast quantity. This stock-to-

Figure 2.
Inventories for the
California fruit growers
 IJPDLM demand type of policy produces a constant turnover ratio for all warehouses.
30,1 The policy is simple and easy to execute, which probably is the reason for its
use.
The high correlation coefficient of 0.96 indicates that the inventory policy is
being well executed. Except for perhaps one data point, the turnover ratio for
each warehouse is near the turnover curve. A question to be raised is whether
78 the stock-to-demand policy is the correct one to be using. This will be answered
subsequently.

Example 2
The Polaroid Corporation maintained inventories of instant photographic
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products in a central warehouse and ten subsidiary warehouses throughout

Europe to supply consumers and commercial customers. The central
warehouse replenished the subsidiaries, which in turn supplied retail,
wholesale, and industrial locations. Each warehouse served a national market
within the European Economic Community (EEC). From data on sales and
inventory investment levels, turnover ratios were determined for each
warehouse. Data for this example are from a case study on Polaroid (Harvard
Business School, 1995). The results are graphed in Figure 3.
The linear and power curves fit the data equally well with an adjusted
correlation coefficient of about 0.80. Overall, the b value in the power curve is
about average at 0.69, indicating typical inventory management performance
for finished goods. There is moderate variation of the individual inventory
turnover ratios, probably due to differences in the service levels and

Figure 3.
Inventory turnover
ratios for ten European
warehouses of the
Polaroid Corporation
 replenishment rules used within each country of the EEC. The inventory Evaluating
control rules are fundamentally sound with b  0.7, but the company would inventory
likely benefit from more consistency in their application. management
Example 3
Pharmaceuticals is a high-valued product line of a major drug-store chain. It is
one of four product categories into which all line items are classified. Supplies 79
are maintained at five warehouses to serve individual retail outlets. Figure 4
shows a plot of warehouse inventory turnover ratios, in this case as monthly
ending inventory and monthly throughput that has been annualized.
The inventory control rules are being consistently executed, as indicated by
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a correlation coefficient of 0.97. However, the b value of 0.86 in the power curve
suggests that inventory levels are nearly proportional to the warehouse
throughput. Since the product line is of high value, there is a concern that the
inventory policy being used is not producing the desired economies that one
would expect. That is, there should be a greater taper in the power curve with a
b value between 0.5 and 0.7. There should be disproportionately less inventory
as throughput increases.

Other observations
Occasionally, b values in the power form of the turnover curve that are outside
of expected values will be seen. A b value of less than 0.5 in a well-defined data
set is not theoretically possible using current inventory control procedures. A
0.5 value occurs when EOQ-based pull procedures are used, there is no
uncertainty in replenishment lead times or in demand, and the inventory

Figure 4.
Inventory for
pharmaceuticals in the
warehouses
 IJPDLM control rules are not violated. On the other hand, a b value greater than 1
30,1 occasionally occurs. This means that larger warehouses are taking
disproportionately more stock than the smaller ones.
When developing the turnover curve, the classification of the items may be
too broad or the function of the stocking point may be misrepresented. For
example, if the inventory-throughput data represent all inventory items within
80 the ABC classification, then the assumption is that all items are stocked at all
warehouses. In practice, each item class is more likely to be managed
differently and is not likely to be placed in the same warehouses as other item
classes. The larger warehouses may contain all item classes, whereas the
smaller warehouses may contain only A items.
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Also, some warehouses may have a dual role, first as a field warehouse
whose purpose is to supply customers, and second as a regional or plant
warehouse to restock field warehouses. More inventory is likely to be held in
the dual-function stocking points than in the single-function ones.
In both of these cases, distortion in the turnover curve will result. It is
possible that the turnover ratio is so low in the larger warehouses relative to the
smaller ones that inventory levels appear to increase with higher throughputs
rather than decline. The remedy is to carefully prepare the data to represent a
consistent product class and inventory function in warehouses.

Estimating with the turnover curve

Another use of the turnover curve, in addition to auditing, is to estimate the
effect of bringing errant stocking points in line with existing inventory policy
and to project the benefit of changing inventory policy.

Errant points
Figure 5 illustrates the inventory turnover ratios for specialty chemicals.
Seven warehouses stock the company's product to serve customer demand,
but three additional inventories are maintained at plant locations. The plant
locations hold dual-purpose inventories that serve local customers, but they
also are used to replenish the inventories of the seven field warehouses. The
plants are Atlanta, Detroit, and Los Angeles, with the inventory for the
plants in Figure 5 representing only that which filled the field warehouse
function.
The turnover ratios were substantially different for the plant warehouses as
compared to the field warehouses. According to company personnel, there were
EOQ-based stocking rules in place at the warehouses, but the plant managers
controlled inventories using their own rules. As can be seen in Figure 5, the
Atlanta and Los Angeles plants have low turnovers, probably reflecting a risk-
averse strategy in inventory management. The turnover ratios are 1 and 2,
respectively. The Detroit plant manager minimizes inventories, perhaps at the
expense of higher than normal customer service failures, but the inventory has
 Evaluating
inventory
management

81
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Figure 5.
Inventory turnover for a
specialty chemicals
company

a high turnover ratio of 18. What would the net result be if these disparities
were eliminated, i.e. the plant warehouse inventories were brought in line with
the turnover curve shown in Figure 5?
Moving the plant inventory levels to those estimated by the turnover curve
gives the results shown in Table I. Encouraging the plant managers to follow
the inventory policy established for the field warehouses can reduce the
company's average inventory by 255,000lb of chemicals.

Changing the inventory policy

A food processor manufactures and distributes numerous food products to
retail outlets. Dry grocery inventory is located in ten stocking points as shown
in Figure 6. A linear turnover curve has a very high adjusted correlation
coefficient of 0.98, indicating a consistent execution of the company's inventory
control rules. The low intercept and the linear curve signals that the inventory
policy was a stock-to-demand type, which was verified by the company. In fact,

Current
Annual average Estimated Change in
throughput, inventory, inventory, inventory,
Plant 000s lb 000s lb 000s lb 000s lb
Table I.
Atlanta 395 395 145 a
±250 Average inventory
Los Angeles 750 380 225 ±155 change for a specialty
Detroit 540 30 180 150 chemical company
805 550 ±225 when plant inventory
policy replicates that of
a
Notes: 145 = 2.5094D0.679 = 2.5094(395)0.679 its field warehouses
 IJPDLM
30,1

82
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Figure 6.
Inventory turnover
curve for a foods
processor

inventory control was described as ``a ROP/ROQ with ROP equal to safety
stock plus forecast over lead time, and ROQ equal to one week forecast for A
items''. Although inventory control rules were well executed, they do not
produce the expected reduction in inventory levels as the warehouse
throughput increases. This example clearly shows that the two large
warehouses are realizing about the same turnover as the smaller ones. Would
EOQ-based inventory replenishment rules produce the expected economies of
scale?
Using a medium-size warehouse from the data set having a turnover of
ten and a throughput of 3,500,000 cases as a reasonable midpoint, a power
curve can be fit to this point. A power curve with a b exponent of 0.7 is used,
since b = 0.7 represents a normative value P for an EOQ-based inventory
control policy. Fitting the curve IT ˆ a i Di0:7 to the data givesPthe a
coefficient of 1.158 and a power curve formulation of IT ˆ 1:158 i Di0:7 .
This curve is plotted in Figure 6, which, when used to project the inventory
level for each warehouse at its current throughput level, shows revised
turnover ratios. In this case, the larger warehouses show the greatest
change. Whereas the overall turnover ratio was 10.9, it is now projected to
be 11.7 with the change in the inventory replenishment rules. The turnover
differences are shown in Table II with an overall increase in the turnover
ratio in favor of the EOQ-based policy.

Target turns
It is common for management to target the number of turns that a system of
warehouse inventories is to achieve. However, the turnover ratio for each
warehouse should not be identical, unless a stock-to-demand inventory policy
 is in effect. As was previously mentioned, the turnover ratios for larger Evaluating
throughput warehouses should be higher than for smaller ones, if all inventory
warehouses hold the same product mix and provide comparable levels of management
product availability. What should the target turnover ratios be for each
stocking point?
A major furniture company purchases furniture items from numerous
vendors for sale through its retail stores. Inventory is maintained in eight 83
warehouses. The turnover curve for the warehouse inventories is shown in
Figure 7. The adjusted correlation coefficient is high at 0.93, indicating that the
inventory policy, on the average, is being consistently applied across the eight
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Turnover ratio
Throughput, Existing Existing fitted curve Revised policy,
Warehouse cases (000s) turnover TO = Di/(12.8 + 0.089Di) TO=Di/1.158D0.7
i

1 4,192 10.35 10.86 10.54

2 10,230 13.03 11.08 13.78
3 3,961 13.34 10.84 10.37
4 3,522 10.00 10.80 10.00 Table II.
5 2,102 11.87 10.52 8.57 A turnover ratio
6 13,597 10.32 11.12 15.01 comparison of the
7 2,883 9.42 10.70 9.42 existing inventory
8 2,714 10.73 10.67 9.25 policy and a revised
9 4,481 10.75 10.89 10.76 EOQ-based policy for
10 3,957 9.29 10.84 10.36 the example shown in
Turnover 10.91 10.94 11.68 Figure 6

Figure 7.
Inventory turnover for a
furniture retailer with a
target turnover ratio and
associated turnover
curve
 IJPDLM warehouses. The b value, approaching 1, suggests that stock-to-demand
30,1 replenishment policy might be in effect.
The distribution manager described the method of restocking inventories as
looking over the usage rates for the last eight months and projecting the sales
rate for the next six weeks. The reorder size is based on the difference between
the forecast and the quantity on hand. Order sizes are adjusted for those items
84 that are to be placed on sale. The quantities for promotional items exceed the
quantities typically ordered for these items. The current system-wide turnover
ratio is 8.8. This is a stock-to-demand type of inventory control policy
suggested by the nature of the turnover curve as fitted to the company's
inventory data.
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Suppose that management wants to achieve ten turns per year system wide.
There are two actions that can help to achieve the desired result. First, employ
an EOQ-based inventory method of control that will reduce the b exponent in
the power curve to at least a reasonable 0.7 value. Second, increase the turnover
ratio in the warehouses until the target system ratio is achieved.
Estimating the target turnover ratios for each warehouse requires
constructing a new turnover curve. A reasonable target point is established for
a mid-point or representative throughput level, and the throughput is divided
by the target turnover ratio to give the target inventory level. The point is
shown as  in Figure 7. With the resulting estimated inventory for this point,
solve the power curve for a using b = 0.7. Plot the revised turnover curve and
compute the inventory levels for the throughput for each warehouse. The
turnover ratios can also be found for each warehouse by solving the revised
turnover curve for each warehouse throughput level, as shown in Table III. If
the turnover for the system is not close enough to the desired ratio, revise the
target point  and re-compute until the target system-wide inventory turnover
ratio is achieved.

Warehouse
annual Current Current Revised Revised
Warehouse throughput, inventory turnover inventory turnover
no. $000s level, $000s ratio level, $000s ratio

1 $45,613 $5,079 9.0 $5,670a 8.0

2 75,517 10,472 7.2 8,069 9.4
3 83,734 10,860 7.7 8,674 9.7
4 102,248 12,144 8.4 9,976 10.2
5 111,506 11,887 9.4 10,600 10.5
6 114,890 11,772 7.8 10,824 10.6
Table III. 7 127,304 13,159 9.7 11,630 10.9
Estimating inventory 8 132,402 14,856 8.9 11,954 11.1
levels based on a $793,214 $90,229 8.8 $77,397 10.2
target turnover ratio
a
of ten Notes: 5,670 = 3.106(45,613)0.7
 Conclusions Evaluating
It has been the intent of this article to provide additional data and examples to inventory
confirm and extend the previous research on the turnover curve. Several management
previous conclusions are given further credibility, specifically:
. that the turnover curve is a reasonable representation of common
inventory control policies;
85
. that the normative exponent in the power form of the turnover curve is
0.7; and
. that the turnover curve is a reasonable predictor of the type of inventory
policy that a firm is actually using for individual item control.
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It is further observed that the linear and power forms of the turnover curve are
the most valuable in expressing the types of inventory policies observed in
practice.
The turnover curve is a good representation of how inventories are being
managed in the aggregate. Because of this, the curve provides good insight as
to nature of the rules being used to manage inventory levels at multiple
stocking points within a supply chain network. From the turnover curve,
appraisals can be made as to how well a company's current inventory control
rules are being executed. Good and questionable inventory control performance
are easily seen in a plot of inventory turnover ratios.
Projections can be made as to the possible benefit of bringing inventory
management performance, as represented by inventory turnover ratios, in line
with a company's stated inventory control procedures. In addition, these
projections can be extended to show the effect of changing the manner in which
inventories are managed. The turnover curve is useful in estimating the impact
on system-wide inventory levels when a new target is set for the system
turnover ratio.
The turnover curve is easily developed from readily available data that a
firm routinely collects. It is also a simple yet powerful tool for auditing
inventory management performance and estimating the effect of inventory
management change.
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