Stock Cycle Formula

Stock Cycle Formula

Stock cycle formula is shown below. This formula has been explained with an easy example;

Stock Cycle =     Number of Weeks in a Year                                 Number of Order

 Stock Cycle Formula Example

Number of Weeks in a Year = 52

Number of order placed during year= 15

Calculate Stock Cycle?

Solution

Stock Cycle =     Number of Weeks    

                          Number of Order

=52/15

=3.46 weeks or 3.46 x7 =24.22 Days

Stock cycle basically tell about the frequency of order placement. Stock cycle may be calculated in week or days. Stock cycle may either be directly calculated in days by using following formula, or weeks may be converted into days.

Stock Cycle =     Number of Days in Year                                  Number of Order

Example

Number of Days in a Year = 365

Number of order placed during year= 15

Calculate Stock Cycle?

Solution

Stock Cycle =     Number of Days in Year    

                           Number of Order

=365/15

=24.33 Days

Significance of Stock Cycle Calculation

Stock cycle helps management in placing the stock orders. Management knows the timing of each order. With the help of stock cycle calculation, a tentative schedule of stock orders can be prepared.