Days on hand
Also called DOH
Reviewed by Dasha ShakovVP Marketing, Proton
Updated
What is days on hand?
Days on hand is the number of days a distributor’s inventory would last at its rate of sales. For one item it is units on hand ÷ average daily usage; for a whole business it is average inventory at cost ÷ annual cost of goods sold × 365, which equals 365 ÷ inventory turns.
How it works
Days inventory outstanding (DIO) is the accounting name for the business-level figure above, calculated from past cost of goods sold. Days of supply looks forward instead, dividing what is on hand by forecast usage, so it changes whenever demand is expected to change.
Days on hand example
For 600 filters selling about 20 a day over the past 90 days, days on hand is 30. With a seasonal rush forecast at 30 a day next month, days of supply is only 20.
Related terms
- Inventory turnsInventory turns is the number of times a distributor sells through its average inventory in a year: annual COGS ÷ average inventory at cost.
- Reorder pointA reorder point is the stock level at which a distributor places a new purchase order for an item, set so the new stock arrives before the old runs out.
- Safety stockSafety stock is extra inventory a distributor keeps to cover unexpected demand or late supplier deliveries, so it doesn’t run out before the next shipment.
- Lead timeLead time is the time between placing an order and receiving the goods.
