Quantity on hand (QOH) is how many units of a product you physically hold right now, on the shelf and in the store room. It includes units already promised to customers and units you can't sell. So it is not the number you can sell: that is quantity available.
For example, a phone accessories shop in Lagos, Nigeria, with 30 chargers in the store room and 20 on the shelf has 50 on hand. This guide works out how many of those it can sell, how many are on the way, and why the 50 drifts from the shelf.
What counts in quantity on hand
Quantity on hand counts every unit you hold, whatever its state and whoever it is promised to. It leaves out what you have ordered but not received, and what is on the road between branches.
| Stock | On hand? | Can you sell it? |
|---|---|---|
| On the shelf and in the store room | Yes | Yes |
| Promised to a customer, not yet sold or handed over | Yes, until it leaves | No, it is promised |
| Returned by a customer, waiting for a check | Yes | Not until it passes |
| Damaged or expired, not yet written off | Yes, in the record, until written off | No |
| At another branch | Yes, in that branch's figure | Only from that branch |
| Ordered from the supplier, not delivered | No | No |
| Sent to another branch, not yet arrived | No, in neither branch | No |
A customer return is the row shops most often get wrong. Inbound Logistics notes that returned inventory must be assessed for its condition first. Only then does it go back to stock, to repair or off the books.
Software and logistics manuals also disagree on the damaged row. Stock software counts every unit physically present until someone records it off. The USAID Logistics Handbook counts only "usable stock", and treats unusable items as "losses to the system".
Follow the handbook in practice. Take broken, expired and faulty units off the record as soon as you find them. Then on hand holds only stock you could sell or promise.
Quantity on hand vs available vs on order
Quantity on hand is what you hold, quantity available is what you can still sell, and quantity on order is what suppliers will deliver. Each answers a different question, and mixing them up causes double orders and broken promises.
Quantity available = quantity on hand − units promised to customers − units you can't sell
Projected stock = quantity available + quantity on order
For example, the Lagos shop's chargers cost ₦3,500 each and sell about 4 a day. The figures are illustrative, not a real shop's.
| Figure | Chargers | How |
|---|---|---|
| Quantity on hand | 50 | 30 in the store room + 20 on the shelf |
| Promised to customers | 6 | A school's order, to be collected next week |
| Can't be sold | 3 | Faulty returns, going back to the supplier |
| Quantity available | 41 | 50 − 6 − 3 |
| Quantity on order | 100 | Due from the supplier in 10 days |
| Projected stock | 141 | 41 + 100 |
The supplier takes 10 days, so the shop's reorder point is 4 a day × 10 days + 12 of safety stock = 52 chargers. On hand alone, 50 is below 52 and says order now.
Projected stock says otherwise. The 41 available last about 10 days, just as the 100 on order arrive, so a second order now would sit on the shelf for weeks.
The reorder point guide gives the rule: compare the reorder point with stock on hand plus stock on order, or you will order twice. Setting the reorder point and safety stock for each product is covered in how to avoid overstocking and stockouts.
Why quantity on hand matters
Three everyday decisions rest on quantity on hand, and each needs a different version of it.
- Reordering needs available stock plus what is on order, as above. The raw on-hand figure buys stock you already have coming.
- Promising a customer needs quantity available. Selling the school's 6 chargers to a walk-in customer leaves you short when the school arrives.
- Valuing stock uses quantity on hand at cost: 50 × ₦3,500 = ₦175,000. Units that will sell for less than they cost are cut to what they will fetch.
All three are only as good as the figure. Deciding who may change it, by receiving, adjusting or selling, is where inventory control starts.
Why quantity on hand drifts from the shelf
The record drifts for two kinds of reasons: timing, which corrects itself, and errors, which only a count finds. Tell them apart before you adjust anything.
| Cause | Kind | What happens |
|---|---|---|
| A delivery on the shelf but not yet received in the system | Timing | The shelf holds more than the record until someone receives it |
| Sold at the till, left for the customer to collect | Timing | The record has taken the units off; the shelf holds them until collection, so set them aside at a count |
| A transfer sent but not yet arrived | Timing | The units are in neither branch's figure |
| Sales made while the till was offline | Timing | They reach the record when the till reconnects |
| A sale not rung up, or rung up as the wrong product | Error | The record holds more than the shelf; for a lookalike, another product holds less |
| Breakage, expiry or theft not recorded | Error | The record holds more than the shelf |
| Bought by the carton, entered by the piece | Error | A carton of 24 goes in as 1 piece, or the reverse (unit of measure) |
| A miscount at the last count | Error | The adjustment itself put a wrong figure in |
To check the figure, roll it forward from the last count and compare it with a new one. The USAID handbook uses this line, and insists that the closing figure is the counted stock, "not a calculated stock on hand":
Closing stock = opening count + received − issued − losses ± adjustments
Any gap that timing doesn't explain is an error to trace before you adjust it away. The inventory discrepancy guide reads a gap's size and sign to find its cause.
How to keep quantity on hand accurate
- Record each movement when it happens. Receive a delivery when it lands, not when the invoice is paid.
- Count a few lines often. A short count on a daily rota, a cycle count, finds drift within weeks instead of at the year end.
- Take unusable units off at once. A faulty return or a broken unit left on the record makes on hand look sellable.
- Let few people change it. Only the people who receive, count and adjust should be able to move the figure.
- Count materials too. A workshop's materials on hand decide what it can make this week. Its scrap decides how fast that figure falls (how to reduce manufacturing waste).
How to read quantity on hand in ArmPOS
ArmPOS shows stock on hand per product and per warehouse. A sale, purchase, return or transfer changes it only once it is completed, received or approved; promised and ordered units are listed, not counted.
Products › All Products shows each product's Quantity across your warehouses, and its page shows the stock in each (Find, edit and update products). Reports › Inventory Valuation multiplies each product's stock on hand by its cost (Stock reports).
| Record | Stock on hand | Guide |
|---|---|---|
| A POS sale, or a sale saved as completed | Goes down | Add a sale without the POS |
| A sale saved as pending or ordered | No change | Add a sale without the POS |
| A quotation | No change | Quotations |
| An online order, pending | No change until someone clicks Confirm | Online orders |
| A purchase saved as received | Goes up | Record a purchase |
| A purchase saved as ordered or pending | No change until you edit it to received | Record a purchase |
| A customer return with the status Received | Goes up | Returns and refunds |
| A return to the supplier | Goes down | Return goods to a supplier |
| A damage | Goes down | Record damaged stock |
| An adjustment | Up or down by the Qty you enter | Count and adjust stock |
| A transfer approved as Completed | Down in one warehouse, up in the other | Move stock between warehouses |
| A transfer approved as Sent | Down in the sending warehouse only | Move stock between warehouses |
A product's Stock Alert counts stock on hand only, and an ordered purchase adds nothing to it. Before you reorder from Reports › Product Quantity Alerts, check Purchases › All Purchases for anything already ordered (Reports to check every day).
Work out quantity available by hand for the lines with orders waiting. Take the sales saved as ordered or pending off the stock on hand.
A customer return saved as Received goes back into stock, faulty or not. Record faulty units off with a damage, or with a return to the supplier when they go back.
If the till allows overselling, stock can fall below zero. Reports › Negative Stock Report lists those products to count and correct.
If the internet drops while the POS is open, it keeps selling. Its sales are kept on the device and sent when the connection returns (The POS screen).
Frequently asked questions
Is quantity on hand the same as stock on hand?
Yes, the two names mean the same figure. ArmPOS's reports call it stock on hand, while some logistics manuals count only usable units under that name.
Does quantity on hand include reserved stock?
Yes. Units promised to a customer stay on hand until they leave the shop; quantity available is the figure that takes them off.
How do you calculate quantity on hand?
Count it, or roll it forward: the last count, plus units received, minus units sold and lost, plus or minus adjustments. A perpetual inventory system does that rolling for you with each movement.
Can quantity on hand be negative?
Only in the record. A negative figure means something left that the record never received. The usual cause is a delivery nobody entered, or a sale rung up as the wrong product.
Pick your three fastest lines today and write down, for each, what is on hand, promised, unsellable and on order. To have the on-hand side kept for you with every sale and delivery, create a free ArmPOS account.
