This KPI calculates the total value of inventory items in stock by multiplying the on hand quantity by the average unit cost + on hand quantity multiplied by items with a fixed unit cost: (On Hand Qty*Avg Unit Cost + On Hand Qty * Fixed Unit Cost).
Managing inventory is a balancing act of keeping enough in stock so frequently used items can be procured on demand vs holding too much in stock which becomes inefficient.
Reviewing this KPI regularly in conjunction with analyzing issue trends can give decision makers insight into whether they should increase, decrease, or maintain purchasing volume.
This KPI does include inventory that is designated as discontinued. If discontinued inventory is no longer on the shelves, and adjustment transaction should be created to zero out that item's quantity.
To see how your inventory value compares to peers, review the Average Inventory In Stock per Student per Year KPI.