On-hand inventory refers to the number of physical units of a particular product a company has in its possession at a given time. This can include finished goods ready to be shipped to customers and raw materials and components used in the production process. The on-hand inventory figure is vital for businesses because it represents the number of available products to meet customer demand. The projected on-hand inventory formula estimates the amount of inventory a company will have at a given point in time. This formula considers the company's sales, production, and lead time. Lead time is the time between when an order is placed and when it is received. The projected on-hand inventory formula is (average daily sales x lead time) + safety stock - average daily production.