Days Inventory Outstanding (DIO)
Quick answer
The average number of days goods sit in stock before being sold.
Key takeaways
- Demand forecast accuracy
- Order quantities (EOQ, MOQ)
- Dead stock and overstock
What DIO is
Days Inventory Outstanding (DIO) = (average inventory / cost of goods sold) × 365. It shows how many days, on average, a product sits in the warehouse before selling. It's the days-equivalent of inventory turnover.
Why it matters to the board
DIO is the operational component of the Cash Conversion Cycle (CCC). The lower the DIO, the less cash stays locked in stock. It's operations' direct lever on working capital.
What influences DIO
- Demand forecast accuracy
- Order quantities (EOQ, MOQ)
- Dead stock and overstock
How CRMconnect helps
CRMconnect lowers DIO through forecasting, correct reorder points and dead-stock elimination, turning fewer days of inventory into measurable freed cash.
Real-world example
A distributor had a DIO of 68 days. Through better forecasting and stopping replenishment of dead items in CRMconnect, DIO dropped to 54 days, freeing significant capital.
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Frequently asked
DIO vs inventory turnover?+
They are the same information expressed differently: turnover = how many times stock rotates per year; DIO = how many days it sits. DIO = 365 / turnover.
How do I reduce DIO without stockouts?+
Through accurate forecasting and a calibrated reorder point, not blind under-stocking. The goal is less dead stock, not less availability.
Where CRMconnect fits
Related terms
Cash Conversion Cycle (CCC)
The number of days cash stays locked in operations: inventory + receivables - payables to suppliers.
LogisticsInventory turnover
How many times stock is fully sold and replenished in a period - a measure of capital efficiency.
LogisticsDead stock
Goods unsold for a long period that lock capital and space, with little prospect of selling at normal price.
FinanceWorking capital
The difference between current assets and current liabilities - the cash a company has to fund daily operations. A key financial-health indicator.