What is Weeks of Supply?
Weeks of supply represents the estimated number of weeks your current inventory will last based on the projected demand for the product. It is calculated by comparing the inventory on hand to the average weekly Demand Forecast while factoring in your current sales velocity.
Look at weeks of supply as your projected sales actuals for each week. For example, if your total fulfillment center (FC) inventory quantity is 16 units and weeks of supply is 4, you’re projected to sell 4 units each week on average.
Weeks of supply is used to derive the ‘inventory status’ or the health of your inventory on hand, such as low stock or excess stock. You can also use this metric to gain insights on when to next replenish your inventory.
Weeks of Supply and Inventory Status:
Flywheel will assign the inventory status value for a SKU based on standard weeks of supply thresholds. The aim is to keep your SKUs at the healthy threshold to ensure you’re always able to meet customer demand but are not overstocked.
Out of Stock = 0 weeks of supply
Low Stock = less than 4 weeks of supply
Healthy = between 4-13 weeks of supply
Excess = greater than 13 weeks of supply