How Much Stock to Reorder: No Stockouts, No Dead Stock

It's Saturday, a customer asks for canned soft drinks — your best seller — and the shelf has been empty since noon. Meanwhile, three cartons of shampoo ordered last month sit unopened at the back. Both problems have the same cause: ordering by gut feeling. Fast sellers get under-ordered, slow sellers get over-ordered, and your cash ends up in the wrong place.

This article gives you a simple method you can run in a notebook or spreadsheet: when to place an order, how much to order, and how to adjust for holidays and slow suppliers.

Ordering wrong costs you in two ways

Running out costs more than the items you didn't sell. Say the shop sells 36 cans of soft drink a day; a day and a half without stock means 54 lost cans. But a customer who comes in for drinks often also buys snacks, ice and instant noodles — with no drinks, they take the whole basket to the shop next door. Run out a few times and regulars get used to going elsewhere.

Dead stock is quieter. 120 bottles of shampoo at a cost of 2 USD each is 240 USD (about 960,000 Riel at 4,000) sitting on a shelf. If you only sell 1.5 bottles a day, that stock takes 80 days to clear — nearly three months of cash that can't be reused, plus dust, approaching expiry dates and shelf space taken from items that do sell.

The goal isn't a warehouse that's always full. It's enough to sell until the next delivery arrives, plus a small safety buffer.

Step 1: Know how much each item sells per day

Everything below starts with each item's average daily sales. How to get it:

• Add up sales over the last 4 weeks and divide by 28. Shorter than that and one busy day skews it; longer and it won't keep up with change.
• Leave out unusual days: holidays, or a one-off customer who bought 10 cartons wholesale.
• You don't need this for every item. Start with your 20–30 best sellers — they usually make up most of your revenue.

Example from a mini mart in Siem Reap, last 4 weeks:

Step 2: The reorder point — when to order

5 numbers shop owners should check every day introduced this formula:

Reorder point = Average daily sales × Lead time in days + Safety stock

• Lead time: from the moment you place the order until the goods are on the shelf — measured from experience, not from the supplier's promise.
• Safety stock: a buffer for busier-than-usual days or late deliveries. The simplest way: the longest delay you've seen, in days × average daily sales.

When an item's stock drops to its reorder point, order that same day.

Look at the shampoo: it sells slowly, but the long lead time means its reorder point is far from small. Slow sellers with a forgotten lead time are the ones that run out by surprise.

Write the reorder point on a shelf tag or in a spreadsheet column. Whoever checks the shelves only has to compare: fewer than the number on the tag, report it.

Step 3: How much to order

Once you know when to order, the next question is how much. If you order on a schedule (say once a week from the same supplier):

Order quantity = Average daily sales × (Days until next order + Lead time) + Safety stock − Current stock

Example with soft drinks: today's count is 150 cans, you order once a week, and delivery takes 3 days.

• Needed: 36 × (7 + 3) + 72 = 360 + 72 = 432 cans
• Minus current stock: 432 − 150 = 282 cans
• The supplier sells cartons of 24: 282 ÷ 24 = 11.75 → order 12 cartons (288 cans).

Check: during the 3-day wait you sell 108 cans, leaving 42 when the delivery arrives; add 288 and you have 330 cans, more than 9 days of sales — enough to last until the following delivery (7 days later) with the buffer still intact.

When rounding to cartons, cases or sacks: round fast sellers up, and consider rounding slow sellers down — an extra carton of soft drinks is gone in a day, an extra carton of shampoo takes months.

Seasonal stock: Khmer New Year, Pchum Ben, year end

The formula uses the last 4 weeks of sales, so it can't see a holiday coming. Before Khmer New Year (Choul Chnam Thmey, April), Pchum Ben (September–October) or the year-end season, adjust by hand:

1. Use last year's sales for the same period instead of the last 4 weeks. If soft drinks sold 3 times the normal rate in the week before New Year last year, use 36 × 3 = 108 cans/day for that week.
2. Add to the lead time. Suppliers are overloaded too, trucks stop, deliveries slip. A 3-day lead time should be planned as 5 days.
3. Order earlier, but only raise quantities for items that really sell more over the holiday (drinks, beer, snacks, offerings, gift items). Everything else stays at its normal level.
4. Drop back to normal right after the holiday. A common mistake is to keep ordering at holiday levels for another week or two, then sit on stock into the next month. Many people go back to their home provinces for the holiday, and the week after can be slower than a normal week.

After every holiday, note which items ran out early and which were left over. Next year, that's your best ordering guide.

When suppliers deliver late or short

Lead time is the number people guess wrong most often. How to get it right:

• Record the order date and the actual delivery date for every purchase. After 4–5 orders you'll know this supplier's average lead time and their worst delay — use those numbers in the formula, not "it'll be there tomorrow".
• Short deliveries: record only what actually arrived and keep the rest as pending. Don't record the full quantity "to keep it simple" — your stock on paper will be higher than reality and you'll reorder too late.
• Your top sellers deserve a second supplier, even at a slightly higher price. Paying 1 USD more for 2 cartons is still cheaper than an empty shelf all Saturday.
• If a supplier is regularly late, raise the safety stock on their items or move to someone else.

Every month: find stock that's been sitting too long

Besides avoiding stockouts, look the other way once a month: which items are overstocked? The simplest measure is days of stock:

Days of stock = Current stock ÷ Average daily sales

120 bottles of shampoo ÷ 1.5 = 80 days. For grocery items, under 30 days is healthy; anything over 60 days:

• Stop reordering until it falls below its reorder point.
• Order less next time, even if the supplier offers a bulk discount — 5% off doesn't make up for cash tied up for three months.
• Clear it with bundles or a calculated discount (work out the profit left per item before you discount — see Pricing products from cost).

For fashion and one-off styles you can't reorder, see how to handle slow stock and broken size runs in Managing a clothing store's inventory across sizes and colors.

Summary

Doing this in LeangPos

The hardest part by hand is counting sales and tracking purchase orders. In LeangPos, every product has a stock history recording each sale, receipt, transfer and adjustment, and the inventory page shows Available quantity per branch — see Viewing stock & making adjustments. The Dashboard lists the week's best sellers and warns you about items running low.

When you order, create a purchase order linked to a supplier: if the supplier delivers short, receive it in parts — the order stays Partially received until it's complete, and stock only increases by what actually arrived. No more notebook saying one thing and the shelf another.

To see exactly which items are about to run out and which are tying up your cash, you can try LeangPos for free.