What is Committed inventory?

If you ignore committed inventory, your available-to-sell numbers look higher than they really are. A customer could order a product that is physically on the shelf but already promised to someone else, and you end up overselling.

For a small store owner, the fix is to always work from available stock, not on-hand stock. Available stock is what you can still promise to new customers after committed orders are set aside.

Formula

Example

A candle store has 50 units of a jar candle on hand. 12 of those units are tied to orders placed yesterday that have not shipped yet. Available inventory is 50 - 12 = 38 units. If the owner reorders based on the full 50, they will overbuy.

Common mistakes

• Confusing on-hand inventory with available inventory when deciding what to reorder.
• Forgetting to subtract committed stock before promising new orders, which leads to overselling.
• Letting committed orders sit too long without shipping, which makes the available number stale and misleading.

Committed inventory and SteadyShelf

SteadyShelf bases its forecasts and order-by dates on available stock, so committed inventory does not get double-counted as sellable when it calculates reorder quantities.

SteadyShelf is launching on the Shopify App Store. Join early access to get the install link first.

Related terms

Reorder point · Backorder · Overselling · Incoming inventory

Full inventory glossary

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