Example of a weighted average of the inventory level
The average projected inventory of a plan item is one of the performance indicators in the Resource Analysis and Optimization module of Enterprise Planning. LN computes it as a weighted average of the average inventory levels found for the various plan periods. The average is a weighted average in that it takes the length of each plan period into account.
Example
Inventory on hand = 10
Plan period | 1 | 2 | 3 |
Length of plan period (days) | 2 | 2 | 5 |
Projected (end) inventory | 20 | 30 | 99 |
Average inventory level | 15 | 25 | 64.5 |
In this example, the weighted average inventory level for all plan periods is computed as follows: