Inventory
Inventory coverage
Inventory coverage shows how long available stock will last at the expected demand rate.
Also known as
Days on hand · Stock cover
Direct answer
What is Inventory coverage?
Inventory coverage shows how long available stock will last at the expected demand rate. It makes overstock and impending stockouts comparable. A forward-looking calculation is more useful than one based only on historic averages.
Formula
Inventory coverage = available inventory ÷ forecast daily demand
Practical example
1,200 available units at a forecast of 40 units per day equal 30 days of cover.
What teams should remember
Inventory coverage shows how long available stock will last at the expected demand rate.
It makes overstock and impending stockouts comparable. A forward-looking calculation is more useful than one based only on historic averages.