About the Days of Inventory on Hand Calculator
This days of inventory on hand calculator tells you how long your current stock will last. Use the units method for a single SKU or warehouse — stock on hand (plus anything already on order, if you like) divided by average daily usage — to get days and weeks of supply and an estimated run-out date. Or use the financial method to calculate days inventory outstanding (DIO) from average inventory value and cost of goods sold, the figure analysts use to compare companies.
Planners and buyers use days of supply to decide what to reorder and spot overstock; finance teams use DIO as part of the cash conversion cycle. Set a target days-of-supply and the calculator also shows the inventory level that target implies and how much you are above or below it.
Both methods assume consumption continues at the average rate you enter. Seasonal or promotional demand can shorten or stretch real coverage, so use a forecast daily rate rather than last year’s average when demand is changing.
With the default inputs, the days of inventory on hand is 28 days. Change any value above to recalculate instantly.
How to use the days of inventory on hand calculator
- 1Choose the units method for a SKU or the COGS method for company-level DIO.
- 2Enter stock on hand and average daily usage — or beginning and ending inventory, COGS and the period length.
- 3Optionally add units already on order and the count date.
- 4Set a target days of supply.
- 5Read days and weeks of supply, the run-out date and how far you are from target.
Formula and method
With the units method, days on hand is simply the units available (on hand plus any open orders you choose to include) divided by average daily usage. Weeks of supply divides that by 7, and the run-out date adds the whole days of cover to the count date.
With the financial method, average inventory is (beginning + ending) ÷ 2, daily COGS is cost of goods sold ÷ days in the period, and DIO is average inventory ÷ daily COGS. Annualized inventory turnover is 365 ÷ days on hand. The target level is daily usage × target days, and the difference from current stock shows excess or shortfall.
- Inventory
- Units (or value) available
- Daily usage
- Average units consumed or sold per day
- COGS
- Cost of goods sold over the period
- DIO
- Days inventory outstanding
Worked examples
4,200 units using 150 a day
4,200 units ÷ 150 per day = 28 days, or 4 weeks of supply, so stock runs out around October 29. A 21-day target needs 3,150 units, leaving 1,050 units (7 days) of excess cover.
Company DIO from the financial statements
Average inventory is ($480,000 + $520,000) ÷ 2 = $500,000. Daily COGS is $3,650,000 ÷ 365 = $10,000, so DIO = 50 days and turnover is 7.3 times a year. Holding only 21 days would need $210,000 of stock.
Including an open purchase order
900 on hand plus 1,200 arriving gives 2,100 units, which last 2,100 ÷ 120 = 17.5 days, to about December 2. A 30-day target needs 3,600 units, so you are 1,500 units short.
Frequently asked questions
How do you calculate days of inventory on hand?+
Divide the inventory you have by how much you use per day. In units: 4,200 units ÷ 150 units a day = 28 days. In money: average inventory ÷ (COGS ÷ 365). Both give the number of days current stock would last at the current rate.
What is a good days inventory outstanding?+
It depends heavily on the industry: grocers and restaurants may hold under 30 days, general retailers 60–90 days and industrial or aerospace manufacturers well over 100. Compare against direct competitors and your own trend rather than a universal number.
What is the difference between weeks of supply and days of supply?+
They measure the same coverage in different units: weeks of supply is days of supply divided by 7. Retail planners often think in weeks of supply, while finance and supply-chain analysts usually quote days.
Is a lower DIO always better?+
Lower DIO frees cash and reduces carrying costs, but too little stock causes stockouts, expedited freight and lost sales. The goal is the lowest coverage that still meets your service-level target given lead time and demand variability.
How is DIO related to inventory turnover?+
They are inverses: DIO = 365 ÷ inventory turnover, and turnover = 365 ÷ DIO. A business that turns inventory 7.3 times a year holds about 50 days of stock.