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Manufacturing KPI Dictionary
Days Inventory Outstanding (DIO): definition, formula and manufacturing interpretation
Understand days inventory outstanding (dio) and how to use it in manufacturing analysis.
Days Inventory Outstanding (DIO)
Days Inventory Outstanding (DIO)
Formula: Average inventory ÷ COGS × days
Use the KPI with product, plant, customer, supplier and period context where appropriate. Connect changes to operational and financial drivers.
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Practical interpretation and manufacturing use
DIO estimates how many days inventory remains on hand relative to the cost of goods sold. It is a key working-capital measure for manufacturers.
Formula
DIO = Average Inventory ÷ COGS × Days in Period
How to use this KPI
- Monitor DIO by inventory category and location.
- Investigate slow-moving and excess inventory rather than treating all stock equally.
- Connect DIO changes to purchasing, production schedules and demand.