5 Point Annual Average
This article covers meaning & overview of 5 Point Annual Average from operations perspective.
What is 5 Point Annual Average?
5 Point Annual Average is a methodology to determine average for a one year period generally for inventories in PMG Studies. Performance Measurement Group(PMG) is the management consulting arm of PwC with expertise in operational performance. It provides industry specific standards in areas of Supply Chain Management.
Example of 5 point Annual Average
In case of want to calculate the average inventory for a product in a warehouse you can take five reference points and calculate the average for the same
5 point average inventory = (31/12/10 + 31/03/11 + 30/06/12 + 30/09/13 + 31/12/14)/5
Usage of 5 point Annual Average
The % point average is used to calculate these two terms given below
1. Total Inventory Days of Supply
Formula:
(5 Point Annual Average Gross Inventory X 365)/(Cost of Goods Sold)
2. Inventory Days of Supply
Formula:
(5 Point Annual Average Gross Inventory X 365)/(Calendar Year Value of Transfers )
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