Key points
- Reorder level = average daily sales × supplier lead time + safety stock.
- ABC analysis shows which few items deserve most of your attention.
- Fast movers need tight control; slow movers need a stop rule.
- Review levels every season, not once a year.
Reorder level: when to order
The reorder level is the stock at which you should place an order so it arrives before you run out.
| Item | Average daily sales | Supplier takes | Safety stock | Reorder level |
|---|---|---|---|---|
| Cooking oil 1 L | 12 | 3 days | 12 | 12 × 3 + 12 = 48 |
| Paracetamol strip | 20 | 2 days | 20 | 20 × 2 + 20 = 60 |
| LED bulb 9W | 4 | 7 days | 8 | 4 × 7 + 8 = 36 |
Safety stock: how much buffer
Safety stock covers busier-than-usual days and late deliveries. A simple starting point is one or two days of average sales for fast movers, more if your supplier is unreliable.
ABC analysis: where to focus
Sort your items by yearly sales value. Usually a small group makes up most of your sales.
| Group | Typical share of items | Typical share of sales | How to manage |
|---|---|---|---|
| A | 10–20% | 70–80% | Tight reorder levels, weekly review, never run out |
| B | 20–30% | 15–20% | Standard reorder levels, monthly review |
| C | 50–70% | 5–10% | Buy less, review rarely, cut slow ones |
Fast and slow movers
- Fast movers: keep them on the reorder list and check weekly.
- Slow movers: set a rule, such as no reorder if not sold in 90 days.
- Dead stock: clear it with discounts, bundles or supplier returns.
Seasonal planning
For festive, wedding or school seasons, look at last year’s sales for the same weeks and plan orders a few weeks ahead. Raise reorder levels temporarily, then bring them back down.
How ERP helps
- Calculates average sales from your bills.
- Produces a reorder list from your levels.
- Shows ABC and stock age reports.
- Lets you change levels for a season.