SalevaReorder levels for a small shop: when to buy more of each product, and how much
A practical way to set a reorder level and an order quantity for each product in a small shop, using your own sales, your supplier's visiting day, pack sizes and shelf space, with worked examples in rupees.
It is Thursday evening. A regular customer asks for the tea she always buys, and the shelf is empty. The distributor came on Tuesday. You had four packets left then, it looked like enough, and you did not order. Now she will buy her tea somewhere else until next Tuesday, and probably her sugar and milk with it.
On the next shelf sit eleven bottles of a floor cleaner you bought in a hurry three months ago. Two have sold.
Both problems come from the same place: the decision to order was made by looking at a shelf and guessing. A reorder level replaces the guess with a number you work out once and then simply follow. This article shows how to set that number for each kind of product, and how to decide the quantity that goes with it.
What a reorder level does, and what it does not
A reorder level is a stock count. When a product falls to that count, you order it. Nothing more.
It is not the level at which you run out. It is the level at which, if you order now, the new stock arrives just before you run out. The gap between the two is what protects you.
The basic sum, covered in buying well, is daily sales multiplied by the days you wait for stock, plus a cushion. What makes it hard in a real shop is everything around it: uneven sales, suppliers who come on fixed days, cartons that hold twelve when you want seven, and a shelf that fits only so much. The rest of this article is about those parts.
A level only works on a true count. If the record says nine and the shelf holds four, it warns you too late, so levels and regular counting go together.
Sort your products into three groups first
Do not try to calculate a level for every product. A shop with 600 products does not need 600 calculations. It needs careful numbers for a few and rough numbers for the rest.
Go through your list and put each product into one of three groups.
| Group | Which products | How to set the level |
|---|---|---|
| A: must never run out | The 20 to 40 items that customers come in for: flour, sugar, tea, oil, milk, the popular soap | Work it out properly, and review it every month |
| B: steady sellers | Things that sell every week but nobody leaves the shop over | Work it out once, roughly, and review each season |
| C: slow and occasional | Items that sell a few times a month or less | A simple rule: keep one or two, reorder when one is left |
Group A is where your time goes. If a group A item runs out, you lose the basket that would have come with it, and sometimes the customer. Group C deserves the opposite treatment: anything more than one or two on the shelf is cash that could have bought fast movers.
Find the real daily sale
Every level starts from how many you sell in a day. This number is easy to get wrong in three ways.
Use at least four weeks. One week can be unusual. Add up four weeks of sales and divide by the days the shop was open. If you are open six days a week, that is 24 days, not 28.
Leave out the days you had none. If the product was out of stock for five of those days, you sold nothing on those days because you could not, not because nobody asked. Divide by the days it was actually on the shelf. Otherwise an item that ran out looks slower than it is, you set a lower level, and it runs out again.
Notice the shape of the week. Many shops sell far more on one or two days: the weekend, market day, or the first days after salaries. Write down both numbers, the average and the busiest day. You will need the busy number for the cushion.
An example. A kiryana shop sold 150 one-kilo packets of sugar in four weeks. The shop was open 24 days, and sugar was out of stock for 4 of them. So it was on the shelf for 20 days. The real daily sale is 150 ÷ 20 = 7.5 packets, not 150 ÷ 24 = 6.25.
Size the cushion to the risk
The cushion, sometimes called safety stock, is the extra you hold for the days that do not go to plan. Many shopkeepers pick one cushion for everything, such as "two extra days". It is better to size it to the product.
Ask three questions about each group A item.
- How uneven are its sales? If the busiest day is double the average, the cushion needs to cover that. If it sells the same every day, a small cushion is enough.
- How reliable is the supplier? A distributor who has never missed a Tuesday needs less cushion than one who arrives a day or two late once a month.
- What happens if it runs out? For flour or milk, the customer goes elsewhere. For a second brand of biscuit, they pick another one from your shelf.
A simple scale that works:
- Steady sales, reliable supplier, easy to substitute: one day of average sales.
- Uneven sales or an unreliable supplier: two to three days.
- Uneven sales and an unreliable supplier, and customers leave without it: up to a week.
There are two limits on a cushion. Anything with a short life, such as bread or milk, cannot carry a big one because the cushion itself will expire. And the cushion costs cash. A week of extra stock across forty products is a lot of money asleep on the shelf, which is one of the ways a profitable shop runs short of cash.
When the supplier comes on a fixed day
The usual sum assumes you can order on any day. Many small shops cannot. The distributor's order taker comes on Tuesday, the goods arrive on Thursday, and the next chance to order is the following Tuesday.
In that case the question on Tuesday is not "has it fallen to the reorder level?" It is: "Is there enough to last until the delivery after this one?"
If you skip this Tuesday, the next stock arrives on Thursday of next week. That is nine days away. So the level for Tuesday is nine days of sales plus the cushion.
Take the sugar again, selling 7.5 a day, with a cushion of two days.
- Days to cover if you do not order today: 9
- Sales in that time: 7.5 × 9 = about 68
- Cushion: 7.5 × 2 = 15
- Order-day level: 83 packets
If there are fewer than 83 packets on Tuesday, order. If there are more, you can safely wait a week.
This is why the tea ran out in the opening story. Four packets looked fine for a product that sells one a day, but they had to last nine days.
For a supplier you can reach any day, such as a wholesale market you visit yourself, use the ordinary level: sales during the days you wait, plus the cushion.
Decide how much to order
Once you know when, the quantity follows from one more number: the most you want to hold just after a delivery. Call it the fill-up level.
Fill-up level = sales until the next delivery after this one + cushion
Order quantity = fill-up level − what you have now
For the sugar with a weekly distributor: one delivery to the next is 7 days, so 7.5 × 7 = about 53, plus the cushion of 15, gives a fill-up level of 68 just after delivery. If you expect to have 20 left when Thursday's delivery arrives, order 48.
Then real life adjusts that number in three ways.
Pack sizes. Sugar comes in bags of 10 or cartons of 24, not in 48s. Round to the nearest full pack. Round up for group A items and round down for group B. If the smallest pack is far more than a slow product needs, look for a supplier who sells smaller quantities.
Shelf and store space. If the shelf holds 30 and the back room has space for one carton, a fill-up level of 68 means stock on the floor, where it gets damaged. Order more often if you can, or give that product space taken from a slow one.
Shelf life. Never order more than you can sell well before the date. For a product with a month of life, an order that lasts three weeks leaves nothing for the customer's own kitchen. The article on reducing stock loss covers selling the oldest first.
The level tells you when. The fill-up level tells you how much. If you only remember one of the two, you will either run out or overbuy.
A worked example for five products
Here is how a small grocery might fill in a reorder card. The distributor takes orders on Tuesday and delivers on Thursday. The amounts are examples only.
| Product | Group | Daily sale | Cushion | Order-day level | Fill-up level |
|---|---|---|---|---|---|
| Sugar 1 kg | A | 7.5 | 2 days (15) | 83 | 68 |
| Tea 190 g | A | 1 | 3 days (3) | 12 | 10 |
| Cooking oil 1 L | A | 4 | 2 days (8) | 44 | 36 |
| Dish soap bar | B | 2 | 1 day (2) | 20 | 16 |
| Floor cleaner | C | Under 1 a week | None | 1 | 2 |
Read the tea line. It sells only one a day, so it feels like a product that never needs attention. But on order day it needs 12 on the shelf to be safe, and most shops would look at 5 or 6 and move on.
Write the two numbers for each group A product on a card. On order day, walk the card, not the shelves.
Keep the levels alive
A level set in October is wrong by January. Sales shift with the weather, school terms and festivals.
- Every month, check group A. Look at each item's sales for the last four weeks. If the daily sale has moved by more than about a fifth, change the level.
- Before a season, raise the levels early. Cold drinks before summer, dry fruit and tea before winter, and almost everything before Ramadan. Raise them two to three weeks ahead, and lower them again before the season ends so you are not left holding it.
- After every stock-out, ask why. Was the level too low, was the delivery late, or was the count wrong? Each has a different fix.
- Every quarter, look at group C. Anything that has not sold at all should have a level of zero: sell what is left and do not reorder. A full stock take is a good moment to do this.
Two signs tell you a level is wrong. If you often have a lot left when the new delivery arrives, the level or the cushion is too high. If you are down to the last one or two each time, it is too low, and one late delivery will empty the shelf.
Questions shopkeepers ask
I have hundreds of products. Where do I start?
Start with ten. Pick the ten items whose absence sends a customer to another shop, and set an order-day level and a fill-up level for each this week. Add ten more next week. Within a month your group A is done, and the rest can run on the simple rule of reordering when one or two are left.
My sales change a lot from week to week. Is a fixed level still useful?
Yes, but set it from the busier weeks, not the average, and make the cushion larger. A level that is a little high costs you some cash for a few days. A level that is too low costs you sales.
What level should a new product have?
You have no sales history, so buy the smallest quantity the supplier will sell and watch it for four weeks. Count how many sold and on how many days. Then set its level like any other product.
Should the level be in pieces or in cartons?
Use the unit you sell in, because that is what you count on the shelf. Work out the order in pieces first, then turn it into cartons when you write the order. Keeping the level in cartons hides the difference between a full carton and one with three pieces left.
Saleva keeps this number on each product as Minimum stock, and its Reorder screen lists everything that has fallen below it, ready to send to the supplier as a WhatsApp order. The Forecast screen works out each product's daily sale from your own bills and suggests an order quantity, so the monthly review takes minutes. The products and stock guide shows where each of these lives.
Try this in Saleva
Saleva is a free Android point-of-sale app for small shops: selling, stock, customer dues, staff and an online shop page. Selling works with no internet at all.