What is a good inventory level?
Asked 2 years ago
Hi fellow Shopify store owners, I was doing an inventory analysis, and I'm still struggling to figure out the delicate balance between not having enough and having too much stock. What have you found is a good level to have?
Tuesday, March 22, 2022
Establishing the correct inventory level and maintaining a practical stock balance can be calculated quite easily. By following these formulas you can establish the core five stock levels and always have a guideline that suits your business.
Minimum Inventory Level = Maximum Sales x Maximum lead time - (Average sales x Average lead time)
Maximum Inventory Level = Reorder level + Reorder Quantity - (Minimum sales x Minimum Reordering Period)
Average Level = Minimum stock level + 1/2 Reorder Quantity
Danger Level = Average sales x Maximum Emergency Reorder period
Reorder Level = Maximum sales x Maximum Reorder Period
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