Refers to the typical or average quantity that is on hand for any given item. As on hand varies over time, and average quantity provides a more stable data point making it easier for the retailer to place strategic reorder points. So, when an item dips below the average quantity point, it usually needs to be reordered. Formula: Average Inventory (Month) = (Beginning of Month Inventory + End of Month Inventory) ÷ 2

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