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Inventory Managment Tools

Excel tools to help you avoid running out of products while also preventing overstock that ties up your money. If you understand them, you'll be able to use the templates with ease.

Reorder Point (ROP)

  • Definition: The stock level at which you should place a new order

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  • Formula: (Average Daily Sales * Lead Time in Days) + Safety Stock

    • ​Lead Time: number of days it takes for a new order to arrive after you place it

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Real-life use: If you sell 5 loaves of bread a day, your supplier takes 3 days to deliver, and you keep 10 loaves as a safety buffer, your reorder point is (5 * 3) + 10 = 25 loaves. Excel can calculate this automatically so you always know when to restock.

Order Quantity

  • Definition: The number of units you should order each time to keep up with sales without overstocking​

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  • Formula: Average Monthly Sales + Safety Stock

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Real-life use: If you sell 300 loaves per month and keep 25 loaves as safety stock, your order quantity should be 300 + 25 = 325 loaves per order. This way, you’re covering your demand with a small buffer.

Safety Stock

  • Definition: Extra stock you keep as a buffer to avoid running out during unexpected spikes in demand or supplier delays. On slow days it just sits there, but on busy days it protects you.

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  • Formula: (Max Daily Sales * Lead Time) −(Average Daily Sales * Lead Time)

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Real-life use: If on a busy day you sell 15 loaves, on an average day 10 loaves, and your supplier takes 5 days to deliver, your safety stock is (15 × 5) − (10 × 5) = 25 loaves

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  • On slow days , safety stock just stays untouched

  • On busy days, safety stock is what keeps you from running out before the new order arrives

  • If your supplier is late, safety stock gives you a cushion until the delivery comes

All the tools mentioned here have ready-to-use versions in the Templates page, just download and start using them

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