The Small Business Inventory Calculator estimates the inventory quantity and dollar investment needed to cover expected demand through a replenishment cycle and safety-stock buffer. It also reports reorder point using average daily demand and supplier lead time.
Product businesses can use the result to plan purchases without relying only on intuition. The model assumes reasonably stable average demand during the selected cycle; highly seasonal, perishable, or supply-constrained items may require a more detailed forecast by product and date.
1. Estimate average daily demand for one SKU or a group measured in the same units.
2. Enter supplier lead time from order placement to usable receipt.
3. Enter how often inventory is reviewed or replenishment orders are placed.
4. Choose a safety-stock buffer expressed as extra days of demand.
5. Enter landed unit cost when you want the inventory investment estimate.
6. Review the target position and reorder point, then round quantities to practical pack sizes.
The target position is the on-hand plus on-order inventory needed to cover lead time, the review interval, and the selected buffer.
Subtract usable on-hand and already ordered inventory before deciding the next purchase quantity.
Given: Daily demand of 32 units, 14-day lead time, 7-day review interval, 5 safety days, and unit cost of $12.75.
Calculation: Safety stock = 32 × 5 = 160 units. Reorder point = 32 × 14 + 160 = 608 units. Target position = 32 × (14 + 7) + 160 = 832 units. Investment = 832 × $12.75 = $10,608.
Result: Target inventory position is 832 units, with a reorder point of 608 units.
Inventory position is usable on-hand inventory plus open purchase orders, minus committed or backordered units when those are tracked.
Base the buffer on demand variability, supplier reliability, service goals, shelf life, and the cost of a stockout.
Only when they use the same unit and have similar demand and cost behavior. SKU-level calculations are usually more useful.
No. The reorder point covers lead-time demand plus safety stock; the target position also covers the period until the next review.
Round the final order quantity up to a valid case, pallet, or minimum-order multiple after subtracting current inventory position.