Inventory how-to

How much inventory should you keep on hand

Keep enough stock to cover your supplier's lead time plus a safety buffer, based on how fast each SKU actually sells.

Short answer: Keep enough stock to cover your supplier's lead time plus a safety buffer, based on how fast each SKU actually sells. There is no single right number across your catalog. It is a per-variant calculation, and it should use recent sales, not a gut feeling or a flat rule like "always have 100 units."

Why "enough" depends on the SKU

A fast seller with a 7-day lead time needs far less stock on hand than a slow mover with a 60-day lead time from an overseas supplier. If you apply the same stock level to both, you either tie up cash in the slow mover or run out of the fast seller. The right amount is tied to daily sales velocity and how long it takes to get more in.

The core formula

The standard way to set this is: reorder point = daily sales x (lead time + safety days). This tells you the stock level that should trigger a new order. From there, order quantity = daily sales x (lead time + days of cover) minus what you already have on hand or on order. Days of stock on hand = on hand / daily sales, which tells you how many days until you run out at current pace.

Safety days protect against surprises

Lead times are rarely exact and sales are rarely flat. Safety days are a buffer on top of the average lead time to absorb a late shipment or a sales spike. A reliable local supplier might only need 3 to 5 safety days. An overseas supplier with inconsistent shipping might need 14 or more. Set safety days per supplier, not as one number for the whole store.

Don't oversize because of seasonality guesses

Early on, with less than about 13 months of sales history, it is safer to base stock levels on recent demand (for example a 28-day sales window) rather than guessing at seasonal swings. Once you have a full year or more of data, you can adjust for known seasonal patterns with more confidence.

Step by step

  1. List each SKU with its supplier lead time and current daily sales rate.
  2. Set a safety day buffer per supplier based on how reliable their shipping has been.
  3. Calculate reorder point for each SKU: daily sales x (lead time + safety days).
  4. Check current stock against that reorder point weekly, not just when you remember.
  5. Round order quantities up to case packs or supplier minimums before placing the order.
  6. Recalculate daily sales regularly so the numbers reflect recent trends, not last year's pace.
  7. Revisit safety days after any late delivery or stockout to see if the buffer needs adjusting.

Worked example

Say a store sells a candle at 4 units a day. The supplier's lead time is 10 days and the store uses 4 safety days. Reorder point = 4 x (10 + 4) = 56 units. If the store wants 14 days of cover after the order arrives and currently has 20 units on hand with none on order, order quantity = 4 x (10 + 14) - 20 = 76 units. If the candle ships in cases of 12, that rounds up to 84 units.

How SteadyShelf helps

SteadyShelf calculates reorder points and order quantities per variant automatically, using your sales window and each supplier's lead time and safety days, and rounds to case packs for you. It forecasts at the store level, so if you stock inventory across multiple locations it will not split recommendations by location, you would need to handle that allocation manually.

$29/month flat, unlimited products and suppliers, 30-day free trial. Run the numbers now with the free reorder point calculator.

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

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FAQ

Should safety days be the same for every supplier

No. Set safety days per supplier based on how consistent their lead times actually are. A supplier who always ships on time needs a small buffer. One with variable shipping needs more days added in case of delays.

What if I don't have 13 months of sales history yet

Use a recent sales window, such as the last 28 days, to estimate daily sales instead of guessing at seasonality. Once you build up more history, roughly a year or more, you can start factoring in seasonal patterns with real data behind it.

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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