Frequently asked questions
What is weeks on hand?
It is the number of weeks your current stock will last at the current sales rate, also called weeks of supply.
How is weeks on hand calculated?
Divide units in stock by units sold per week. With 1,200 units and 150 sold per week, you have 8 weeks on hand.
Which weekly sales figure should I use?
Use the average of recent weeks, or a forecast if demand is changing.
Should I use units or value for weeks on hand?
Units are simplest. If you use value, divide stock at cost by weekly cost of goods sold. Keep both numbers in the same unit.
What is a good number of weeks on hand?
It depends on lead time and product type. You need at least the lead time plus a safety buffer, and perishable items need less.
What if I have too many weeks on hand?
It points to overstock, which ties up cash, takes storage space and risks obsolescence.
What if I have too few?
You risk stockouts. Compare it with your supplier lead time in weeks and reorder in time.
How does it relate to lead time and reordering?
Reorder when weeks on hand falls to about your lead time in weeks plus safety weeks.
How do I handle seasonal sales?
Use forecast weekly sales for the coming weeks rather than the past average, especially before peak or slow seasons.
How do I convert weeks to days?
Multiply by 7. Eight weeks on hand equals 56 days.
How is it different from days inventory outstanding?
Days inventory outstanding uses average inventory and COGS over a past period. Weeks on hand looks forward, using current stock and the current sales rate.
Should I calculate it per product or in total?
Do both. Per product guides ordering, and the total helps with financial planning.
Should I include stock on order?
You can, to see total supply, but label it clearly so it is not confused with stock you already hold.
What about reserved or damaged stock?
Use only available sellable units, so reserved or damaged items do not make your cover look better than it is.
How often should I check weeks on hand?
Weekly for fast sellers and monthly for the rest.