What does weeks on hand mean?
Weeks on hand, also called weeks of supply, is how long your current inventory would last if sales carried on at the present rate and nothing new arrived. It is the same information as inventory turnover, expressed as time, which makes it easier to compare with supplier lead times.
Formula
Weeks on hand = average inventory ÷ (annual cost of goods sold ÷ 52)
Worked example
Cost of goods sold of 520,000.00 a year is 10,000.00 a week. Holding 60,000.00 of stock therefore gives 6 weeks on hand, which is a turnover of 8.67×.
How to use the weeks on hand calculator
- Enter your figures: average inventory value and cost of goods sold for the year.
- Read the result. It updates as you type, so there is no button to press.
- Try other numbers to compare scenarios. Reset brings back the example values.
Getting it right
- Weeks on hand should comfortably exceed your supplier’s lead time in weeks, otherwise you will run out before a new order lands.
- Run it per product or category. An overall figure can hide items with months of cover next to items about to run out.
- Both figures must be at cost. Mixing retail-value stock with cost-value sales gives a number that is too high.
Frequently asked questions
How do you calculate weeks on hand?
Divide average inventory by weekly cost of goods sold, which is annual cost of goods sold divided by 52. Equivalently, divide 52 by your inventory turnover ratio.
How many weeks of inventory should I hold?
Enough to cover the supplier’s lead time plus a safety margin. Fast-moving consumer goods often run on two to six weeks; slower trades hold twelve or more.
Is weeks on hand the same as days inventory outstanding?
They measure the same thing in different units. Multiply weeks on hand by seven to get the days.