How do you calculate inventory policy days?

Divide usable on-hand quantity by average daily usage to get raw days of supply, then divide by your risk factor. With 7,200 units, 480 units/day, and a 1.2x factor you get 15 raw days and 12.5 protected days.

What is the difference between days of supply and protected inventory days?

Days of supply is on-hand divided by daily usage (15 days here). Protected inventory days applies a risk factor to discount that figure for forecast error and supplier risk, giving the lower 12.5 days you can actually rely on.

What is a good number of inventory policy days?

It depends on replenishment lead time: protected days should comfortably exceed lead time plus review period. If your supplier lead time is 10 days, 12.5 protected days is tight but workable; under lead time means you risk stockout.

What does the inventory policy risk factor represent?

It is a multiplier above 1.0 that captures forecast error, supplier unreliability, scrap, and shrinkage. A 1.2 factor means you treat coverage as 20% thinner than nominal; higher-risk SKUs use 1.3 to 1.5.

Why is my protected days lower than my raw days of supply?

Because the risk factor divides into the raw number. Raw 15 days at a 1.2 factor becomes 12.5 protected days, the conservative figure you should plan reorders against.

Inventory policy days vs reorder point: which should I use?

Use them together. Inventory policy days tells you how long current stock lasts under risk; the reorder point converts that into a trigger quantity so the ERP fires a replenishment before protected days fall below lead time.

ERP & MRP Planning calculator

Inventory Policy Days Calculator

Inventory Policy Days tells you how many days your usable on-hand stock will cover demand once you discount it by a risk factor that accounts for forecast error, supplier reliability, and shrinkage. Planners and MRP controllers use it to set reorder triggers and validate safety-stock targets against a service-level policy rather than gut feel. It matters because raw days-of-supply overstates coverage: a number that looks like 15 days can be closer to 12 once you protect against demand spikes and late replenishment. Supply chain and materials teams lean on it during S&OP reviews and when tuning min/max parameters in the ERP.

What this calculator does

Estimate protected inventory days from usable on-hand quantity, daily usage, and policy risk factor.
an inventory planner needs to check whether stock policy covers demand
It computes risk-adjusted days of coverage by dividing usable on-hand quantity by average daily usage and then dividing by an inventory policy risk factor.

Formula used

Protected inventory days = usable on-hand quantity ÷ average daily usage ÷ inventory policy risk factor

Inputs explained

Usable on-hand quantity:
Average daily demand or usage:
Inventory policy risk factor:

How to use the result

Use it when setting reorder points, validating safety stock, or stress-testing whether a SKU's current position survives forecast error and replenishment lead time.
It assumes steady average daily usage; for seasonal or lumpy-demand SKUs the simple average understates real coverage volatility and you should layer in demand variability.

Current U.S. benchmarks

Manufacturing hourly earnings average $30.27 (BLS, Jun 2026), up 4.4% from a year earlier. Median machinist pay is $28.24/hr (OEWS 2025), with state medians on each state page. Manufacturers have 529k open positions nationally (BLS JOLTS).
U.S. manufacturing runs at 75.6% of capacity (Federal Reserve, May 2026). New factory orders are up 2.3% year over year (Census).

Common questions

How do you calculate inventory policy days? Divide usable on-hand quantity by average daily usage to get raw days of supply, then divide by your risk factor. With 7,200 units, 480 units/day, and a 1.2x factor you get 15 raw days and 12.5 protected days.
What is the difference between days of supply and protected inventory days? Days of supply is on-hand divided by daily usage (15 days here). Protected inventory days applies a risk factor to discount that figure for forecast error and supplier risk, giving the lower 12.5 days you can actually rely on.
What is a good number of inventory policy days? It depends on replenishment lead time: protected days should comfortably exceed lead time plus review period. If your supplier lead time is 10 days, 12.5 protected days is tight but workable; under lead time means you risk stockout.
What does the inventory policy risk factor represent? It is a multiplier above 1.0 that captures forecast error, supplier unreliability, scrap, and shrinkage. A 1.2 factor means you treat coverage as 20% thinner than nominal; higher-risk SKUs use 1.3 to 1.5.
Why is my protected days lower than my raw days of supply? Because the risk factor divides into the raw number. Raw 15 days at a 1.2 factor becomes 12.5 protected days, the conservative figure you should plan reorders against.

Last reviewed 2026-05-12.