Inventory glossary
What is Inventory policy?
Inventory policy is the set of rules a store uses to decide when to reorder a product and how much to order each time.
Without a policy, reordering becomes guesswork done at random times, usually when someone notices a product is almost out. A policy turns that into a repeatable process: you decide in advance the trigger point and the order size, so restocking does not depend on memory or luck.
For a small Shopify store, a simple policy might be "reorder when stock hits 20 units, and order 100 units each time" for a steady-selling product, or a tighter check-weekly rule for a seasonal one. The right policy depends on how fast an item sells, how long the supplier takes, and how much the store wants to spend on holding stock versus risking a stockout.
Example
A candle store sells an average of 10 units a day of its bestselling scent. The supplier lead time is 7 days, and the store keeps 20 units of safety stock. Its policy is: reorder point = (10 x 7) + 20 = 90 units, and order quantity = 200 units each time. Whenever stock drops to 90, the store places an order for 200, regardless of the day of week.
Common mistakes
- Setting one policy for all products, even though fast sellers and slow sellers need different rules.
- Picking a reorder point once and never updating it as sales grow or slow down.
- Confusing a policy (the rule) with a single order (the action), so nobody reviews whether the rule still makes sense.
Inventory policy and SteadyShelf
SteadyShelf applies a reorder policy per SKU automatically, using each product's sales forecast and supplier lead time to flag an order-by date and a suggested quantity.
SteadyShelf is launching on the Shopify App Store. Join early access to get the install link first.
Related terms
Reorder point · Min max inventory · Safety stock · Economic order quantity · Periodic review
FAQ
What is the difference between inventory policy and reorder point?
A reorder point is one number, the stock level that triggers an order. An inventory policy is the full rule set, including the reorder point plus how much to order and how often to check stock.
Does every product need the same inventory policy?
No. Fast-selling products usually need a lower reorder point checked often, while slow-moving products can be checked less frequently with a higher buffer relative to sales.
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