What Is Weeks on Hand Inventory and How to Calculate It

Weeks on hand is an essential metric for understanding how long you can sustain your business operations based on inventory levels. All businesses that sell products need to work out their weeks on hand inventory regularly to prepare for potential stockouts and protect revenue. 

Use our free weeks on hand inventory calculator to calculate your weeks on hand automatically and assess your inventory levels regularly. 

What is Weeks on Hand Inventory?

Weeks on hand is a metric that measures the number of weeks a company can sustain its operations based on its current inventory levels. It estimates how long the existing inventory can meet the demand before you need to make more. 

For instance, if a company has 10,000 units of inventory and the average weekly usage is 1000 units, the weeks on hand is ten weeks (10,000 units / 1000 units per week). Based on the average usage rate, the existing inventory can support operations for around ten weeks before you need to manufacture additional inventory.

Weeks on hand is a useful metric for inventory management. It helps businesses determine how adequate their current inventory levels are, plan for production, manage capital, and make effective decisions about stock replenishment to meet customer demand without facing stockouts or excess inventory.

QuickBooks Weeks on Hand Inventory Calculator 

Using our free weeks on hand inventory calculator is straightforward. Simply gather your average weekly usage and inventory levels. Then, input your figures into our calculator, and you’ll have your inventory’s weeks on hand.

Weeks on Hand Inventory Formula 

The formula to calculate weeks on hand inventory is:

Weeks on Hand = (Current Inventory Level / Average Weekly Usage)

How to Calculate Weeks on Hand Inventory

To calculate weeks on hand inventory, you need to gather two key pieces of information:

• Average Weekly Usage: Work out the average amount of inventory you use or sell weekly. Calculate by dividing the total inventory usage or sales over a specific period by the number of weeks.
• Inventory Level: Determine the current inventory level. This is the quantity of inventory available at a given point in time.

Once you have these figures, you can start calculating your weeks on hand using this formula:

Weeks on Hand = Current Inventory Level / Average Weekly Usage

Step-by-Step Guide to Calculating Weeks on Hand Inventory

Need a hand? Here's a step-by-step guide for calculating weeks on hand inventory:

1. Determine the average weekly usage by choosing a specific period for which you want to calculate weeks on hand (e.g., a month or a quarter) and determine the total inventory usage (or sales) for that period. Divide the total inventory usage by the number of weeks in that period to calculate the average weekly usage.
2. Determine the current inventory level by taking a physical count or reviewing your inventory records to determine the current inventory quantity available.
3. Calculate Weeks on Hand by dividing the current inventory level by the average weekly usage calculated in Step 1. The result of this calculation represents the number of weeks the current inventory will last depending on the average weekly usage rate.

Let’s look at an example. 

You want to calculate weeks on hand for a specific product. During a quarter (13 weeks), the total units sold were 500. So, the average weekly usage is 500 units / 13 weeks = 38.46 units per week. 

If the current inventory level for that product is 500 units, the calculation would be as follows:

Weeks on hand = 500 units / 38.46 units per week ≈ 13 weeks

How QuickBooks Can Help 

Weeks on hand is an essential metric for determining whether you have enough inventory to meet customer demand, allowing you to plan and adjust your production schedules.

QuickBooks inventory management software allows you to track and manage your inventory levels accurately. You can input and update inventory quantities as you receive or sell items, giving you the basis for calculating weeks on hand.

Our software also provides reports offering insights into your sales and inventory usage. By running sales reports or customizing reports based on inventory usage, you can gather data on the number of items sold or used within a specific period.

To use our powerful inventory management software, sign up for QuickBooks Online Plus today or start your 30-day free trial.