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Glossary Logistics / Term

Average Payment Period (for materials)

The average time from receipt of production-related materials and payment for those materials. Production-related materials are those items classified as material purchases and included in the Cost of Goods Sold (COGS) as raw material purchases. (An element of Cash-to-Cash Cycle Time).

Calculation: [Five point annual average production-related material accounts payable] / [Annual production-related material receipts/365].

Permanent link Average Payment Period (for materials) - Creation date 2021-12-06


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