## Average Stock Level

The Average Stock is simply the average of minimum and maximum stock.

### Formula (Standard)

$$\text{Average Stock} = \frac{\text{Minimum Stock} + \text{Maximum Stock}}{2}$$

### Alternative Formula

$$\text{Average Stock} = \frac{1}{2} \times \text{Re-Order Qty} + \text{Minimum Stock}$$

Both formulas yield the same result and can be used based on what data the question provides.

Worked example

### Example 1

Min Stock = 260; Max Stock = 1,440.

Avg Stock = (260 + 1,440) / 2 = 850 units

### Example 2

Alternatively: Re-Order Qty = 1,000; Min Stock = 260.

Avg Stock = (½ × 1,000) + 260 = 500 + 260 = 760 units

(Note: the two answers can differ when the underlying max-stock assumption isn't perfectly consistent; the second formula assumes inventory cycles linearly from Min+ROQ back down to Min.)

⚠️ Common exam mistakes

Dividing only Re-Order Qty by 2 and ignoring Min Stock in the alternative formula.
Using max stock or ROL instead of min stock + ½ ROQ.

Reference:

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