What does 'on-hand rate' mean in inventory management?

What does 'on-hand rate' mean in inventory management?

• A. The proportion of stock physically available for use relative to demand.
• B. The rate at which stock is expired.
• C. The speed of receiving stock at the warehouse.
• D. The percentage of items sold.

Answer: (A)

On-hand rate is about stock availability relative to demand. It represents the proportion of inventory physically on hand that is available to meet the demand in a given period. You calculate it by dividing the on-hand quantity by the expected demand and expressing it as a percentage. For example, if you expect 1,000 units of demand and you have 900 units on hand, the on-hand rate is 90%. A higher on-hand rate indicates you’re closer to being able to meet demand without stockouts, guiding replenishment and safety-stock decisions. This concept focuses on availability, not how fast you receive stock, how much has expired, or how much has already sold.

On-hand rate is about stock availability relative to demand. It represents the proportion of inventory physically on hand that is available to meet the demand in a given period. You calculate it by dividing the on-hand quantity by the expected demand and expressing it as a percentage. For example, if you expect 1,000 units of demand and you have 900 units on hand, the on-hand rate is 90%. A higher on-hand rate indicates you’re closer to being able to meet demand without stockouts, guiding replenishment and safety-stock decisions. This concept focuses on availability, not how fast you receive stock, how much has expired, or how much has already sold.