Definition
Days on hand is how many days your current stock of a product will last at the rate you are selling it. It is the quickest way to see whether you hold too little or too much.
The formula
A worked example
A shop has 84 bottles of cooking oil, and sells 6 a day on average. 84 / 6 = 14 days on hand.
Now set that against the lead time. If the supplier takes 5 days, you have 9 days of breathing space before you must order. If the supplier takes 16 days, you are already late. Days on hand is only useful when read next to the time it takes to restock.
| Product | Stock | Sales a day | Days on hand |
|---|---|---|---|
| Cooking oil | 84 | 6 | 14 |
| Tinned milk | 30 | 10 | 3 |
| Matches (box) | 200 | 2 | 100 |
The table shows three different stories. Tinned milk needs ordering today. Oil is fine for now. The matches are possible overstock, with over three months in the back room.
Common mistakes
- Using a bad sales average. A holiday week inflates it. Use a typical period of four weeks or more, and exclude days when the product was out.
- Ignoring seasons. A rate from the slow season understates what you need before Christmas or carnival.
- Treating it as a target. It is a signal to compare against lead time and your cash, not a number to hit.
It is related to inventory turnover: turnover looks at the whole shop over a year, and days on hand looks at one product right now.
In Shopkeepa
Shopkeepa shows current stock for each product and best sellers and slow movers in its reports. Dividing stock by recent sales gives you days on hand, and the low-stock minimum acts on the same idea.
Related terms
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