The turnover rate is a measure of how often a particular warehouse turns over its entire inventory within a specific period of time, i.e. stores, orders or outsources it. The number shows how efficient a warehouse is in managing its inventory and how fast its goods are being moved.
The turnover rate can be calculated by dividing the total number of units sold or consumed by the average inventory. The formula for this is:
A calculation example:
A company generates revenue of 800,000 EUR per year with an average committed capital of 160,000 EUR. In this case, the turnover rate is five. This means that the entire inventory is sold five times a year and replaced with new goods. A high turnover rate indicates efficient warehousing, because long storage times and thus the possible overlapping of the goods are avoided.
