Inventory replenishment

What replenishment is

Inventory replenishment is reordering stock so you can keep selling. For every product you answer two questions: when to order and how much. The method you pick decides how those answers are produced.

All four methods below rely on the same two facts: how fast the product sells, and how long an order takes to arrive (lead time). Compare stock against those, counting what is already on order.

The examples use one product that sells 8 units a day, has a 20-day lead time and a 40-unit safety stock (what is safety stock?).

1. Reorder point

Order a fixed quantity whenever stock falls to a set level, the reorder point.

Reorder point = daily sales × lead time + safety stock

8 × 20 + 40 = 200 units. When your stock position (on hand plus on order) reaches 200, you order. Use the reorder point calculator to check your own numbers.

Best for steady sellers. It breaks when demand moves, because 8 a day is a fixed assumption.

2. Periodic review

Check stock on a fixed schedule, such as every two weeks, and order up to a target level.

Target level = daily sales × (lead time + review period) + safety stock

With a 14-day review: 8 × (20 + 14) + 40 = 272 + 40 = 312 units. At the review you have 150 on hand and nothing on order, so you order 312 − 150 = 162 units.

Best when you order from one supplier on a rhythm, so many products go on one purchase order. The cost is carrying extra cover, because the review period is added to the lead time.

3. Min/max

Set a minimum and a maximum for each product. When the stock position reaches the minimum, order up to the maximum.

Using the numbers above: minimum 200 (the reorder point), maximum 312. The stock position falls to 190, so you order 312 − 190 = 122 units.

Best for teams that want simple rules they can see on a page. The levels need updating when sales speed or lead time changes.

4. Demand-driven (forecast-based)

Instead of fixed levels, forecast demand over the period you need to cover and order the shortfall.

Cover is 20 + 14 = 34 days. A forecast of 10 units a day for the coming period (a seasonal rise on 8) gives 10 × 34 = 340, plus 40 safety = 380. With 150 on hand and 60 on order, you buy 380 − 210 = 170 units. The periodic review target, still using 8 a day, would have said 312 − 210 = 102.

Best for seasonal, trending or promoted products. It needs good data: see inventory forecasting.

Choosing a method

Method	Orders when	Quantity	Suits
Reorder point	Stock reaches a level	Fixed	Steady sellers
Periodic review	A review date arrives	Up to a target	One supplier, regular orders
Min/max	Stock reaches the minimum	Up to the maximum	Simple rules for many products
Demand-driven	The forecast says so	The forecast shortfall	Seasonal and changing products

Most brands use more than one: a rule for stable products, a forecast for the ones that move.

Common mistakes

• Ignoring stock on order. Always compare the stock position, not just on-hand units, or you buy twice.
• Using quoted lead time. Measure it from your past orders with the lead time calculator.
• Leaving out-of-stock days in the average. They lower sales speed and trigger another stockout.
• Ordering below the supplier’s minimum. Round up to the minimum order quantity or combine products on one order. Our purchase order template helps you write it up.

Where Kerno fits

Kerno Forecast is in early access. It works out reorder quantities per product from sales speed, stock on hand, stock on order and real lead times, shows its reasons, and drafts purchase orders per supplier for you to review and send.