Calculate how long your inventory will last based on your current sales and stock levels
Inventory Days on Hand Calculator — Optimize your stock levels and improve cash flow:
Lower inventory days on hand typically indicates more efficient inventory management and improved cash flow.
High Inventory Alert: Your current inventory days on hand is high for your industry, potentially tying up working capital. Consider implementing inventory optimization strategies to reduce stock levels and improve cash flow.
What this means: Inventory Days on Hand (DOH) measures how long it would take to sell through your current inventory at your current sales rate. A lower DOH indicates more efficient inventory management and better cash flow.
The optimal DOH varies by industry, but generally a lower number is better, indicating less cash tied up in inventory. However, it's important to balance inventory reduction with maintaining adequate stock to meet customer demand.
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Inventory Days on Hand (DOH) is a key financial metric that measures how long it would take a company to sell through its current inventory at its current sales rate. It provides valuable insight into inventory management efficiency and helps businesses optimize their stock levels, minimize carrying costs, and improve cash flow.
Days on Hand is calculated by dividing the average inventory by the cost of goods sold per day:
Days on Hand = (Average Inventory ÷ Daily COGS)
OR
Days on Hand = (Average Inventory ÷ COGS) × Number of Days in Period
Where: Average Inventory = (Beginning Inventory + Ending Inventory) ÷ 2
And: Daily COGS = Total COGS ÷ Number of Days in Period
Monitoring your Inventory Days on Hand provides several critical benefits:
Optimal Inventory Days on Hand varies significantly by industry based on factors like product type, supply chain complexity, and customer expectations:
| Industry | Typical Days on Hand | Efficiency Range |
|---|---|---|
| Retail (General) | 60-90 days | 30-120 days |
| Manufacturing | 45-75 days | 30-90 days |
| Wholesale Distribution | 40-70 days | 25-80 days |
| Food & Beverage | 15-30 days | 10-45 days |
| Electronics | 30-60 days | 15-75 days |
| Automotive | 55-85 days | 30-100 days |
| Apparel | 70-100 days | 40-120 days |
| Furniture | 80-120 days | 60-150 days |
Source: APICS (Association for Supply Chain Management), "Supply Chain Operations Reference Model" (SCOR), 2021; and Deloitte Supply Chain Benchmark Study, "Industry Inventory Performance Report," 2022.
A high DOH indicates that inventory is moving slowly and may signal:
A low DOH generally indicates efficient inventory management but requires balance:
Categorize inventory items based on their value and sales frequency:
Source: Institute of Supply Management (ISM), "Best Practices in Inventory Management," 2023.
You can easily track your Inventory Days on Hand using Excel with this simple formula:
=((Beginning_Inventory + Ending_Inventory)/2)/(COGS/Days_in_Period)
For example, if you have cells with:
Your Excel formula would be:
=((A2+B2)/2)/(C2/D2)
To calculate inventory days on hand, use this formula:
Inventory Days on Hand = (Average Inventory Value ÷ Cost of Goods Sold) × Number of Days in Period
Follow these steps:
This calculation tells you how many days it would take to sell through your current inventory at your current sales rate.
To calculate inventory days on hand in Excel, you can use this formula structure:
=((B2+C2)/2)/(D2/E2)
Where:
You can also break it down into steps:
=AVERAGE(B2:C2)=D2/E2=AVERAGE(B2:C2)/(D2/E2)To track this metric over time, create a table with monthly or quarterly data and apply the formula to each period.
While inventory days on hand is a financial metric based on inventory value, inventory on hand quantity refers to the physical count of items in stock. To calculate inventory on hand quantity:
To convert between inventory value and quantity:
For accurate inventory management, it's important to maintain both quantity and value tracking.
A "good" inventory days on hand varies significantly by industry, business model, and product type. Generally:
Industry-specific benchmarks:
The ideal inventory days on hand balances:
Rather than aiming for an absolute number, focus on continuous improvement relative to your industry benchmarks and business requirements.
Inventory turnover and days on hand are complementary inventory metrics that measure the same thing from different perspectives:
| Inventory Turnover | Inventory Days on Hand |
|---|---|
| Measures how many times inventory is sold and replaced in a period | Measures how many days it takes to sell through inventory |
| Higher is generally better (more efficient) | Lower is generally better (more efficient) |
| Formula: COGS ÷ Average Inventory | Formula: (Average Inventory ÷ COGS) × Days in Period |
The relationship between the two metrics is:
Days on Hand = Days in Period ÷ Inventory Turnover
For example, with an annual inventory turnover of 6:
Days on Hand = 365 ÷ 6 = 60.8 days
Both metrics provide valuable insights into inventory management efficiency, with turnover expressing efficiency as a frequency and days on hand expressing it as a time period.
This calculator provides an estimate based on the information provided. For expert guidance on inventory management, consider our professional inventory optimization solutions.
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