How to Calculate Weeks of Supply

Weeks of Supply Calculator

Estimated Weeks of Supply

function calculateWeeksOfSupply() { var inventory = parseFloat(document.getElementById('currentInventory').value); var sales = parseFloat(document.getElementById('weeklySales').value); var display = document.getElementById('resultDisplay'); var resultText = document.getElementById('weeksResult'); var interpretation = document.getElementById('interpretation'); if (isNaN(inventory) || isNaN(sales) || sales <= 0 || inventory < 0) { alert("Please enter valid positive numbers. Weekly sales must be greater than zero."); return; } var weeksOfSupply = inventory / sales; display.style.display = 'block'; resultText.innerHTML = weeksOfSupply.toFixed(2) + " Weeks"; if (weeksOfSupply < 2) { interpretation.innerHTML = "Alert: Your inventory level is critically low. High risk of stockouts."; interpretation.style.color = "#d93025"; } else if (weeksOfSupply > 12) { interpretation.innerHTML = "Observation: You have high stock levels. Consider if storage costs are excessive."; interpretation.style.color = "#e37400"; } else { interpretation.innerHTML = "Status: Your inventory level is currently within a healthy replenishment cycle."; interpretation.style.color = "#188038"; } }

How to Calculate Weeks of Supply: A Strategic Guide

Weeks of Supply (WOS) is one of the most critical Key Performance Indicators (KPIs) in inventory management and retail logistics. It measures how long your current inventory will last based on your current sales velocity. Understanding this metric helps businesses prevent stockouts while minimizing excess storage costs.

The Weeks of Supply Formula

The calculation is straightforward but powerful. To find your weeks of supply, use the following formula:

Weeks of Supply = Current On-Hand Inventory / Average Weekly Sales

Example Calculation

Imagine you run an e-commerce store selling wireless headphones. You currently have 1,200 units in your warehouse. Over the last month, you have sold an average of 150 units per week.

• Inventory: 1,200
• Weekly Sales: 150
• Calculation: 1,200 ÷ 150 = 8 Weeks of Supply

This means that if you don't receive any new shipments, you will run out of stock in exactly 8 weeks.

Why is Weeks of Supply Important?

Effective inventory management is a balancing act. WOS provides the data needed to make informed purchasing decisions:

1. Prevents Stockouts: By knowing your "burn rate," you can set reorder points that account for manufacturer lead times.
2. Improves Cash Flow: Excess inventory ties up capital. If your WOS is 26 (half a year's worth of stock), you are likely wasting money on storage and risking product obsolescence.
3. Identifies Sales Trends: A sudden drop in WOS indicates a spike in demand, signaling it's time to increase production or orders.

What is a "Good" Weeks of Supply?

A "good" number varies significantly by industry. Perishable goods (like groceries) may aim for 1-2 weeks of supply. Consumer electronics or apparel might target 4-8 weeks. Generally, you want your WOS to be slightly longer than your Lead Time (the time it takes for a new order to arrive at your warehouse).

Strategies to Optimize Your WOS

• Shorten Lead Times: If your suppliers deliver faster, you can safely operate with a lower WOS.
• Improve Forecasting: Use seasonal data to adjust your "Average Weekly Sales" figure for more accurate results during peak periods like the holidays.
• Liquidate Slow-Movers: If a product has a WOS of 52+, consider running a promotion to clear out the stagnant stock and free up warehouse space.