Months on hand reporting
Learn about months on hand reporting that measures inventory duration, identifies stocking issues, and helps optimize inventory management strategies.
Sarah Dotson
What is months on hand reporting?
Months on hand reporting is an inventory management metric that calculates how long current stock levels will last based on historical or projected usage rates. This crucial measurement helps organizations understand their inventory position and make informed decisions about purchasing and stock management.
Understanding months on hand calculations
The calculation divides current inventory levels by average monthly usage to determine how many months of stock are available. This analysis provides insights into potential overstocking or understocking situations while helping optimize inventory investments.
Key reporting elements
Essential components include:
- Current inventory levels
- Historical usage data
- Seasonal adjustment factors
- Safety stock considerations
- Demand forecasts
Business applications
Organizations use months on hand reporting to:
- Optimize inventory investments
- Identify excess stock
- Plan purchase orders
- Manage storage capacity
- Control carrying costs
Implementation considerations
Effective reporting requires attention to:
- Data accuracy requirements
- Calculation methodologies
- Regular review cycles
- Exception handling
- Performance tracking
Operational impact
Months on hand reporting helps organizations balance inventory investments with operational needs while maintaining appropriate stock levels across their product portfolio.
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