Inventory how-to

How to calculate days of inventory on hand

Days of inventory on hand equals units on hand divided by your average daily sales rate.

Short answer: Days of inventory on hand equals units on hand divided by your average daily sales rate. The result tells you how many days until that SKU runs out if sales continue at the same pace.

The formula

Days of stock = on hand / daily sales.

Daily sales is usually an average over a recent window, such as the last 28 days. Use a longer window for slow movers so a few quiet days do not skew the number, and a shorter one for fast movers so you catch recent changes in demand.

Why the sales window matters

A single bad day or a one-off bulk order can distort daily sales if your window is too short. If a SKU normally sells 2 units a day but sold 20 in one day because of a wholesale order, your days of stock will look much lower than reality for a while.

For low-volume SKUs, average over a longer period, like 60 or 90 days, to smooth out the noise. For high-volume SKUs, 28 days usually gives a more current picture.

Using days of stock to decide on reorders

Days of stock on its own does not tell you when to order. Compare it to your lead time plus safety days. If days of stock is less than lead time plus safety days, you are at risk of running out before new stock arrives, and it is time to order.

Track it per variant, not per product. Two colors or sizes of the same item can sell at very different rates, so a blended number hides the SKU that is about to stock out.

Step by step

  1. List units on hand for the SKU.
  2. Pick a sales window (28 days is a common default, longer for slow movers).
  3. Add up units sold in that window and divide by the number of days to get daily sales.
  4. Divide on hand by daily sales to get days of stock.
  5. Compare days of stock to the supplier's lead time plus your safety days.
  6. Reorder if days of stock is lower than lead time plus safety days.
  7. Recalculate regularly, since daily sales changes as demand shifts.

Worked example

Say you have 150 units of a candle on hand. Over the last 28 days you sold 70 units, so daily sales is 70 / 28 = 2.5 units a day. Days of stock is 150 / 2.5 = 60 days. Your supplier's lead time is 14 days and you keep 7 days of safety stock, so your trigger point is 21 days. With 60 days of stock, you are well clear of needing to order yet.

How SteadyShelf helps

SteadyShelf calculates days of stock per variant automatically from your sales history and shows it next to each SKU's order-by date, so you do not need to pull the numbers manually. It uses a 28-day sales window by default and layers in seasonality once it has about 13 months of data, but it will not split this out by location since it does not do per-location forecasting.

$29/month flat, unlimited products and suppliers, 30-day free trial. Run the numbers now with the free reorder point calculator.

SteadyShelf is launching on the Shopify App Store. Join early access to get the install link first.

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FAQ

Should I use units sold or units ordered to calculate daily sales?

Use units sold (shipped or fulfilled), not units ordered. Orders can include backorders or pending fulfillments that have not left your shelf yet, which would overstate how fast stock is actually moving.

What if a SKU has very few sales, so daily sales is close to zero?

Use a longer sales window, such as 90 days, and treat the days of stock figure as a rough guide rather than an exact number. For very slow movers, it is often more practical to review stock levels on a fixed schedule, like monthly, rather than relying on a precise days-of-stock trigger.

Let SteadyShelf do this math for every SKU

Order-by dates per supplier, seasonal forecasts and draft POs for your Shopify store. $29/month after a 30-day free trial.

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