GMROI (Gross Margin Return on Inventory)

Gross margin generated per unit of inventory cost invested.

GMROI links margin and inventory investment, so it shows which products actually earn their space and cash.

Gross margin 3M with average inventory at cost of 1.2M = 2.5.

Above 1.0 means the inventory returns more margin than it costs to hold in stock. Compare within a category, never across very different ones.

Improve margin mix, reduce coverage on low-return items, and rationalise the long tail.

Judging every category against one target when turn and margin structures differ fundamentally.