Months on hand reporting

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:

1. Optimize inventory investments
2. Identify excess stock
3. Plan purchase orders
4. Manage storage capacity
5. 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.