On-Hand Inventory
Definition
The physical quantity of stock currently present in a location, regardless of whether it is committed to orders. It is what you would find if you walked out and counted the shelves.
In Practice
On-hand is the rawest inventory number: units physically in the building. It says nothing about availability, since some of it may be allocated to picked orders, quarantined for quality inspection, or damaged awaiting write-off. That is why systems distinguish on-hand from available (on-hand minus commitments and holds) and from inventory position (which also adds inbound supply).
For planners, the discipline is knowing which number each report and calculation uses. Promising customers against on-hand rather than available oversells committed stock; reordering against on-hand rather than inventory position double-buys. Meanwhile, cycle counting exists to keep the on-hand record itself matching physical reality.
Example: a warehouse shows 1,000 units on hand for a SKU, but 300 are allocated to today's pick waves and 100 are in quality hold after a damaged receipt. Sales can genuinely promise only 600, and the planner's replenishment math starts from position, which also includes the 500 on order.
Related Calculators
Related Terms
The total stock available to meet future demand, calculated as on-hand inventory plus on-order inventory minus backorders and committed allocations. It is the number replenishment decisions should be based on.
Available-to-PromiseThe uncommitted portion of current and planned inventory that can be promised to new customer orders. ATP tells sales what can be delivered, and when, without stealing from existing commitments.
Inventory AccuracyThe degree to which recorded inventory matches what is physically present, measured by comparing system records to physical counts. It is usually expressed as the percentage of records that match within tolerance.
Cycle CountingThe practice of counting a small subset of inventory locations or SKUs on a rotating schedule instead of shutting down for a full physical inventory. Discrepancies are investigated and corrected continuously.