Days Sales of Inventory (DSI) is a metric that indicates how many days, on average, inventory sits before it’s sold.

Put simply, DSI tells you how long your current stock would last before it’s sold if you stopped ordering new products today.

The formula for DSI is (Average Inventory / Cost of Goods Sold) x 365.

DSI is not just a finance metric; it serves as a lens into your operations. Here are questions you can answer with DSI:

Where’s your cash tied up? A high DSI could mean you’re sitting on inventory instead of investing in growth.

What’s collecting dust? DSI helps flag slow movers so you can discount, bundle, or stop reordering.

Which channels are pulling their weight? Break DSI down by platform to find your strongest (and weakest) performers.

Where are the bottlenecks? A rising DSI might signal forecasting errors, fulfillment issues, or unnecessary overstocking.

For omnichannel operators, DSI acts like a pulse check on your backend efficiency. If your tech stack is fragmented or you're still wrangling spreadsheets, DSI trends may be delayed or distorted. This makes tracking real-time DSI even more important.

Ultimately, smart inventory management is what separates chaotic growth from scalable, profitable operations. DSI is one of the clearest signals of whether your backend is supporting that growth or silently slowing it down.

How to Calculate DSI (And Actually Use It)

At its core, DSI is a simple formula:

Formula Breakdown:

1. Calculate Average Inventory Add your beginning inventory and ending inventory for the period. Then, divide the total by 2. For example: ($100,000 + $120,000) ÷ 2 = $110,000.

2. Determine COGS Find your Cost of Goods Sold over the same time period (ex. $400,000).

3. Apply the Formula

This means it takes about 100 days to sell through your current inventory.

What That Number Tells You

• High DSI (e.g., 90+ days): You may be overstocked, underselling, or tying up capital unnecessarily.
• Low DSI (e.g., 30–60 days): You're turning inventory quickly, which can be great—unless you’re running into frequent stockouts.

There’s no universal "good" or "bad" DSI. What matters is how your number compares to your past performance and industry norms.

📌 Pro Tip

DSI becomes even more powerful when broken down by product category, channel, or fulfillment location. A single blended DSI hides inefficiencies—splitting it reveals where you’re winning and where you're bleeding.

Misconceptions About DSI That Trip Up Retail Teams

DSI might look simple on the surface, but retail teams often get tripped up. Here are a few common traps to avoid:

• "Lower DSI is always better." Not necessarily. A very low DSI might indicate you're running low on inventory, raising the risk of stockouts (especially during peak seasons or in high-demand categories).

"It’s only useful for finance teams." DSI is a financial metric, but it also helps with operations, supply chain, and inventory planning.

"We can check it once a quarter." In fast-moving omnichannel retail, quarterly snapshots aren’t enough. Trends can shift weekly or monthly. Real-time or frequent DSI tracking gives teams a strategic edge.

"DSI tells us everything we need to know." It’s a helpful signal, but it’s not the whole story. DSI should be viewed alongside other metrics like sell-through rate, stock-to-sales ratio, and forecast accuracy.

DSI vs. Inventory Turnover – What’s the Difference?

DSI and inventory turnover are closely related but they tell different sides of the same story. Understanding both gives a more complete view of how well your inventory is performing.

This chart outlines how DSI and Inventory Turnover differ in what they measure and what they reveal:

Metric	What It Measures	Unit of Measure	What It Tells You
DSI	Average time to sell current inventory	Days	How long inventory sits before it's sold
Inventory Turnover	How often inventory is sold and replaced	Number of cycles	How quickly you’re moving through stock

They’re inverses of each other. If you already know one, you can calculate the other:

DSI = 365/Inventory Turnover and Inventory Turnover = 365/DSI

When to Use Each

• Use DSI when you're thinking in terms of time and want to forecast inventory coverage or cash flow.
• Turn to Inventory Turnover when you're more interested in sales velocity or benchmarking across different time periods.

DSI May Not Tell the Whole Story

DSI is a valuable metric, but there are scenarios where DSI can be misleading:

• Seasonal Product Cycles If you sell around holidays or seasons, off-season DSI spikes are normal—not necessarily a problem.
• Made-to-Order or Just-in-Time Models On-demand production often shows very low DSI, but that reflects the model and is not necessarily efficient.
• Skewed Data from Inaccurate Systems If your inventory data isn’t clean or your systems are disconnected, your DSI numbers could be off, sometimes by a lot. This is especially common for brands still managing inventory across spreadsheets or siloed tools.
• Blended Averages That Hide Detail A single DSI value across your entire business can mask issues in specific categories, locations, or sales channels. Break it down to see what’s really going on.

DSI works best when paired with additional context, real-time data, and other inventory KPIs. Use it as a signal, not a standalone truth.

Bottom Line: DSI Helps You Spot Trouble Before It Hits Your Bottom Line

DSI is more than a number. It’s an early warning system for operational inefficiency, cash flow strain, and hidden inventory risks.

If used correctly, it helps retail teams move faster, invest smarter, and stay ahead of problems before they show up in your margins.

The faster you measure it, the faster you can act.

Ready to Take Control of Inventory?

If you're still guessing how long your stock will last or, worse, finding out too late, it's time for a better system.

Tailor gives fast-growing retail brands real-time inventory insights, automated tracking, and the tools to spot issues before they spiral. No more spreadsheets. No more guesswork.

See how Tailor makes DSI (and everything else) work for you. Schedule a demo or learn more about Tailor’s inventory features.