Days of supply is how long the stock you have will last at the rate you use it: days of supply = stock on hand ÷ average daily use. Four hundred and twenty pounds of green coffee used at 12 pounds a day is 35 days of supply. It's the most useful number in reordering, because it's in the same unit as a supplier's lead time: if the coffee takes 21 days to arrive and you want a week's cushion, you order when the days of supply fall to 28. Below is the formula, weeks of supply, how to get the daily use right, an example for a coffee roaster, how it differs from days inventory outstanding, and a free calculator.
The short version
- Days of supply = on hand ÷ average daily use.
- Weeks of supply = days of supply ÷ 7.
- Daily use from a long enough period: the last 90 days' use divided by 90.
- Order when days of supply ≤ lead time + safety days.
- Order-by date = today + days of supply − lead time − safety days.
- Count in units for reordering; days inventory outstanding is the money version, for the books.
- TaroStack shows every item's days of cover from how fast it's used, and puts the short ones at the top of a reorder list. More below.
The formula
Days of supply = stock on hand ÷ average daily use
Weeks of supply = days of supply ÷ 7
Average daily use is what you used over a period, divided by its days. A week is too short, because one big order swings it; a year is too long, because it hides a change. Ninety days is a good default, and a seasonal business should look at the same season last year. For a finished product, use what was sold; for an ingredient or packaging, what was used.
When to order
Days of supply is in days, and so is a lead time, which is what makes it useful:
Order now if days of supply ≤ lead time + safety days
Order by = today + days of supply − lead time − safety days
The safety days cover a late delivery or a busy week. How many you need is in safety stock formula, and the same rule written as a quantity is the reorder point example.
An example: a coffee roaster
Pali Roasting Co., a made-up coffee roaster on Oʻahu I use in these examples, counts its green coffee and packaging on October 15:
| Item | On hand | Used, last 90 days | Used a day | Days of supply | Lead time | Safety | Order now? | Order by |
|---|---|---|---|---|---|---|---|---|
| Ethiopia Yirgacheffe | 420 lb | 1,080 lb | 12 lb | 35.0 | 21 | 7 | Oct 22 | |
| Colombia Huila | 260 lb | 1,350 lb | 15 lb | 17.3 | 21 | 7 | Order now | Oct 15 |
| Brazil Cerrado | 900 lb | 1,620 lb | 18 lb | 50.0 | 21 | 7 | Nov 6 | |
| Kaʻū, from a local farm | 60 lb | 270 lb | 3 lb | 20.0 | 3 | 3 | Oct 29 | |
| Bag, 12 oz, with valve | 1,800 | 4,500 | 50 | 36.0 | 14 | 7 | Oct 30 | |
| Label, 12 oz bag | 2,000 | 4,500 | 50 | 40.0 | 10 | 5 | Nov 9 |
The Colombia is the problem: 17.3 days of supply against a 21-day lead time means it runs out about four days before an order placed today arrives, even with no safety days at all. It should have been ordered eleven days ago, when it fell to 28 days. The local Kaʻū has only 20 days of supply, but its farm delivers in three, so it can wait two weeks. Days of supply only means something next to the lead time; how to measure the real lead time is in lead time calculation formula.
Days of supply and days inventory outstanding
| Days of supply | Days inventory outstanding | |
|---|---|---|
| Measured in | Units: pounds, bags, jars | Money: inventory value against cost of goods sold |
| For | One item, for reordering | The whole business, for the books and the bank |
| Formula | On hand ÷ daily use | Average inventory ÷ cost of goods sold × days |
Both say how long stock lasts; one answers "when do I order the Colombia?", the other "how much cash is sitting on the shelves?". The money version is in days inventory outstanding example.
Get the calculator
Download the days of supply calculator. Type each item's stock on hand, what was used in the last 90 days, the lead time and the safety days; the daily use, days and weeks of supply, Order now? and the order-by date fill in, counted from the as-of date you type at the top. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.
Where this stops working
A sheet is right on the day you count and wrong a week later, after a big wholesale order and two roast days. It needs the 90 days' use added up for every item, and it doesn't know what's already on order, so the Colombia might be ordered twice.
How TaroStack does it
TaroStack shows every item's days of cover from how fast it's used, and puts the short ones at the top of a reorder list.
Days of cover, always current. Every receipt, batch and shipment moves the stock as it happens, so each item's days of cover is worked out from how fast it has been used, not from a count a week ago.
A reorder list that knows the lead time. Each supplier carries its lead time and minimum, and TaroStack suggests reorder points from how stock actually moves, so the reorder list puts what will run out first at the top.
What's on order. Purchase orders that are out with the supplier are listed with their expected dates, so the Colombia isn't ordered twice, and lead times are checked against how long deliveries really take.
| The job | Spreadsheet | In TaroStack |
|---|---|---|
| Days of supply for every item | Recount and recalculate | Days of cover, as stock moves |
| What to order first | Sort the column | Reorder list, shortest first |
| What's already on order | Check the emails | Open purchase orders, with expected dates |
| Real lead times | A guess | Checked against deliveries |
Reorder lists, suppliers and purchase orders are on every plan, from $49 a month. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.