Inventory glossary

What is Order quantity?

Order quantity is the number of units you put on a purchase order for a given SKU when you reorder from a supplier.

Getting order quantity right keeps cash tied up in stock to a minimum while still covering sales until the next delivery. Order too little and you risk a stockout before the next shipment arrives. Order too much and cash sits on a shelf instead of in your bank account.

A simple way to set it is to cover your demand during lead time plus a safety buffer, then round up to the supplier's case pack size. Review it per SKU, not as one store-wide number, since fast sellers and slow sellers need very different quantities.

Formula

Order quantity = (Average daily sales x Lead time in days) + Safety stock - Inventory on hand

Example

A candle shop sells 6 units a day of its lavender candle. Lead time from the supplier is 10 days, and the shop keeps 15 units of safety stock. It currently has 20 units on hand. Order quantity = (6 x 10) + 15 - 20 = 55 units. If the supplier sells in case packs of 12, the shop rounds up to 60.

Common mistakes

Using one gut-feel number for every SKU instead of calculating it from actual sales and lead time.
Forgetting to subtract incoming inventory that is already on order, which leads to double ordering.
Not rounding to the supplier's case pack or minimum order quantity, which causes rejected or adjusted orders.

Order quantity and SteadyShelf

SteadyShelf calculates a suggested order quantity per SKU from your sales forecast and each supplier's lead time, then rounds it to the nearest case pack before drafting the purchase order.

Work it out for your own products with our free tool: How much inventory to order.

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

Full inventory glossary

FAQ

What is the difference between order quantity and reorder quantity?

They are usually the same thing. Reorder quantity is just another name for the number of units you order once your stock hits the reorder point.

Should order quantity be the same every time I reorder a SKU?

No. It depends on current stock on hand, incoming orders, and recent sales, so it will change each time you reorder.

Let SteadyShelf do this math for every SKU

Order-by dates per supplier, seasonal forecasts and draft POs for your Shopify store. $29/month after a 30-day free trial.

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