How Much Stock Should I Keep?
There's no universal stock level. Reordering depends on how fast an item sells, how long your supplier takes to deliver, and how much of a buffer you want against running out.
Direct answer
There is no universal "right" stock level — how much to keep depends on how fast an item sells, how long your supplier takes to deliver more, and how much of a buffer you want against running out. The shape of the decision is consistent even though the numbers aren't.
Assumptions supplied by the shop owner, not measured facts: this item sells about 5 units a day on average, the supplier takes 4 days to deliver, and the owner wants a 10-unit buffer in case sales are faster than usual that week.
| Average Daily Sales (assumed) | 5 units |
| Supplier Lead Time (assumed) | 4 days |
| Safety Stock (assumed buffer) | 10 units |
| Reorder Point | 30 units |
When stock falls to 30 units, it's time to reorder — for this item, with these assumptions. A different product with different sales speed or a different supplier's lead time needs its own calculation.
Why every input above is an assumption, not a fact
Average daily sales varies by season and by week — a single average can hide real swings. Supplier lead time isn't always consistent, especially with informal supply chains. Safety stock is a judgment call about how much risk of running out you're willing to accept, traded off against how much cash you're willing to tie up sitting in extra stock. None of these numbers can be handed to you as a universal rule — they come from knowing your own products and suppliers.
Where stock turnover fits in
If your stock turnover for a product is low, that's a sign you may be holding more safety stock than the actual sales speed justifies — cash that could be freed up. If turnover is high and you're frequently running short, the reorder point may be set too low for how fast the item actually sells.