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Inventory Management Guide

Calculating Your Reorder Point

Your reorder point tells you when to place a new order. Calculate it by multiplying your average daily sales by your supplier lead time. Then add safety stock.

Formula: (Daily Sales × Lead Time) + (Daily Sales × Safety Stock Days)

For example, if you sell 4 units per day, your supplier takes 5 days, and you want 3 days of safety stock: (4 × 5) + (4 × 3) = 32 units.

Common Inventory Mistakes

Using Seasonal Multipliers

Some products sell more during certain times. Apply a multiplier to daily sales for accurate predictions.

Examples: Back-to-school items (1.5-2x in August), holiday decorations (3-5x in November), summer products (0.5x in winter).

Supplier Performance Tracking

Track how often suppliers meet their promised delivery dates. This helps you adjust safety stock levels. A reliable supplier might need only 2-3 days safety stock. An unreliable one might need 7-10 days.

Inventory Review Checklist