5 Point Annual Average

Published by MBA Skool Team, Last Updated: May 21, 2020

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 )

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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