Days of supply is useful only when compared with a policy, demand pattern, and replenishment constraint. High DOS is exposure, not automatic waste.
Assess inventory healthThe formula
DOS = on-hand inventory / average daily demand. State the demand horizon and whether the rate is forecast, actual, or blended.
Compare with policy
Translate target DOS into target quantity. The gap estimates exposure, but the target itself must reflect lead time, variability, MOQ, service, and criticality.
Pair with turns
Turns measures annual flow relative to average inventory value. DOS is a current snapshot; turns provides a longer financial view.
Segment targets
A universal 45-day target rarely fits every SKU. Segment by service promise, volatility, replenishment time, value, shelf life, and substitution.
Investigate before disposition
Review upcoming demand, open orders, launch/end-of-life status, customer commitments, MOQ, and quality holds before reducing apparent excess.
Failure modes
Zero and intermittent demand make DOS unstable. Seasonal items require a forward demand curve rather than a flat daily rate.
Test your own assumptions.
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Assess inventory health