This measure determines work-in-process (WIP) inventory days of supply, which is calculated as annual average WIP inventory value (i.e. the value of all materials, components, and subassemblies representing partially completed production) divided by the value of WIP transfers per day, assuming 365 days in a year. It is part of a set of Process Efficiency measures that help companies optimize the performance of their "produce product" process by minimizing waste and refining resource consumption.
365 / WIP inventory turn rate in turns
Process efficiency represents how well a process converts its inputs into outputs. A process that converts 100% of the inputs into outputs without waste is more efficient than one that converts a similar amount of inputs into fewer outputs.