Guides
What a reorder point actually is
Most stores set a minimum by feel and then wonder why it is always wrong in October. There is a number behind it, and it is made of three things you already know.
Ask ten hardware store owners what the minimum on a bin should be and you will get ten answers, all of them some version of "about a case." That is not a bad instinct. It is just missing the two things that decide whether a case is enough.
Three numbers, one answer
A reorder point is how much you need on the shelf to get through the time it takes a new box to arrive. So it is built from:
- How fast the item sells — units a day, averaged over a season that looks like the one you are in.
- How long the supplier takes — from the moment the order leaves to the moment the box is on the shelf, not to the moment it ships.
- How badly you want to avoid being out — the cushion, which is where judgment belongs.
Sell four boxes of deck screws a day, wait five days for Cobb Valley, and you need twenty on the shelf just to break even on timing. The cushion is what turns twenty into thirty.
Why the cushion is not the same for everything
The cushion should be generous where being out costs you the customer and thin where it costs you nothing. A contractor who cannot get eight joist hangers goes somewhere that has eight, and may not come back. A homeowner who cannot get a decorative cabinet pull waits a week.
That is the part no formula gives you, and it is the reason Aisle proposes a minimum rather than setting one. You know which items are the ones you cannot be out of.
The October problem
A minimum set in June is a June minimum. If the item sells four a day in June and eleven a day in November, the number that was right all summer is wrong the week you most need it to be right.
A minimum is not a property of the item. It is a property of the item this month.
That is why seasonal windows exist, and why they should come from your own three years of sales rather than a national curve. Your first freeze is not the national first freeze.