How to use min max inventory

What min and max actually mean

The min is your reorder point: the stock level at which you need to place an order so you do not run out before the next delivery arrives. The max is your target stock level: how much you want on hand right after a delivery, based on how fast the item sells and how often you are willing to reorder.

How to calculate min

Min (reorder point) = daily sales x (lead time in days + safety days). Lead time is how long the supplier takes to deliver. Safety days cover demand spikes or supplier delays. If a SKU sells slowly, the min will be low and you will reorder rarely. If it sells fast or the supplier is slow, the min needs to be higher.

How to calculate max

Max is usually min plus however many days of extra cover you want to hold, times daily sales. More days of cover means fewer orders but more cash tied up in stock and more risk of overstock if sales slow down. Less cover means tighter cash but more frequent ordering and more risk of stockouts if a supplier is late.

Running it day to day

Check on hand plus on-order stock against the min for each SKU, ideally weekly. When on hand plus on order falls to or below the min, place an order sized to bring the total up to the max, rounded to the supplier's case pack and minimum order quantity. Revisit the min and max numbers every few months, since sales pace changes with seasons and promotions.

Step by step

1. List each SKU with its average daily sales and supplier lead time.
2. Set safety days per SKU based on how unreliable the supplier or demand is.
3. Calculate min = daily sales x (lead time + safety days) for each SKU.
4. Pick a cover period (for example 30 days) and calculate max = min + (daily sales x cover period).
5. Check on hand plus on-order stock against min weekly.
6. When stock hits min, order up to max, rounded to case pack and minimum order quantity.
7. Review and adjust min/max every 2 to 3 months as sales patterns shift.

Worked example

Say a SKU sells 4 units a day, the supplier lead time is 10 days, and you keep 5 safety days. Min = 4 x (10 + 5) = 60 units. If you want 20 extra days of cover beyond the min, max = 60 + (4 x 20) = 140 units. When on hand plus on order drops to 60, you order enough to reach 140. If you already have 20 on hand and 10 on order, you order 140 - 30 = 110 units, rounded up to the nearest case pack.

How SteadyShelf helps

SteadyShelf automates this per variant: it forecasts daily sales from a rolling 28-day window (plus seasonality once you have about 13 months of history), calculates the order-by date from each supplier's lead time and safety days, and suggests order quantities rounded to case packs and minimums. It works at the store level, not per location, so if you stock multiple warehouses or locations you will need to split or adjust quantities 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.

Related guides

• How to use moving averages to forecast sales
• How to use the two bin system in an online store
• How to use year over year data to forecast
• How to train a team member to do reordering

All inventory how-to guides · Inventory glossary

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