Inventory replenishment is the process of restoring stock to a target level in response to demand and supply conditions. It can move goods from a supplier, factory, distribution center or reserve location.
Which inputs drive replenishment?
- Demand and forecast
- Available inventory
- Open orders and transfers
- Lead time and variability
- Safety stock
- Order minimums and pack sizes
How can a replenishment quantity be calculated?
Assume a target stock level of 1,000 units, 350 units available and 150 units already inbound. The illustrative replenishment requirement is 1,000 − 350 − 150 = 500 units before pack-size or minimum-order adjustments.
Illustrative replenishment calculation
| Planning input | Units | Treatment |
|---|---|---|
| Target stock | 1,000 | Starting requirement |
| Available inventory | 350 | Subtract |
| Inbound inventory | 150 | Subtract |
| Replenishment quantity | 500 | 1,000 − 350 − 150 |
Actual orders should also reflect demand timing, reservations, yield, minimums and case packs.
Periodic vs. continuous replenishment
Periodic review calculates needs at set intervals. Continuous review triggers action when inventory reaches a threshold. The correct model depends on demand, lead time and system capability.
What should be monitored?
Track stockouts, excess stock, forecast error, lead-time performance, fill rate and aged inventory. Overrides should record the business reason.
