Craft Beverages Inventory Planning in Australia: Reorder Points and Cash

Choose the Measure Before You Order

Choose the measure matching the decision. A reorder point answers, “When should I place the next order?” It is the stock level that triggers action when available stock is expected to cover demand through replenishment, with any set buffer. Use it for an ordering decision, not profitability. The inventory reorder calculator helps test inputs.

Days of cover answers, “How long could current stock last?” Divide usable stock by average daily sales to compare products with different sales rates and spot unusually high or low coverage. Cash tied up answers, “How much money is sitting in unsold stock?” Multiply units on hand by product cost when deciding whether excess stock constrains cash, even when days of cover is acceptable. ORVX reports inventory position, dead stock and remaining stock value, keeping trading currency separate.

• Reorder point: act when stock reaches the calculated replenishment trigger.
• Days of cover: act when coverage falls below or rises above your operating range.
• Cash tied up: act when unsold stock value needs reducing or protecting.

Forecast Demand from Your Own Sales

Forecast each SKU from completed orders, not total store revenue, recording weekly/monthly units and stockouts. If 24 units sold over four weeks included one unavailable week, observed demand is 6 per week, versus 8 in-stock; test this estimate. Record each promotion, channel and date: two-for-one offers, email campaigns and paid pushes may create non-repeatable spikes; moves to wholesale, marketplace or physical channels can invalidate the old mix. Compare recent averages (faster channel response) with longer averages (less promotion distortion); keep the lower-error backtest and review changes. ORVX forecasts coming-period revenue from completed months, publishes backtested error, and helps inspect inputs through product and inventory reports.

Set Lead Time and Safety Stock

Set lead time as the full interval from placing a purchase order to having sellable stock available. Include supplier processing and dispatch, freight, Australian delivery to your location, unloading and receiving checks. A supplier’s quoted transit time is only one component. Record actual order-to-available intervals by supplier and SKU, then use the pattern you observe rather than an assumed number.

Lead-time demand tells you how much stock you need while waiting. Safety stock is a separate buffer for variation: late supplier dispatch, freight disruption, receiving delays, or delivery differences between metropolitan, regional and remote Australian destinations. The reorder point combines expected demand during lead time with that buffer. Act on the reorder point when deciding whether to order; adjust safety stock when variability, availability requirements or supplier reliability changes. Do not hide a recurring supplier delay inside safety stock, investigate the cause and update the lead-time input. Use the inventory reorder calculator to test the inputs, and compare them with your own records.

Read the Worked Reorder-Point Example

Read the worked calculation from left to right. Demand during lead time is the expected number of units sold while the next delivery is still travelling. Safety stock is the additional buffer for demand or delivery variation. Together, they produce the reorder point: the stock position at which you should place an order. The reorder point is a trigger, not the quantity to purchase.

Reorder quantity answers a different question: how many units the purchase order should contain. Compare that quantity with available cash, supplier minimums, storage capacity and the product’s shelf life before acting. The cash implication is the reorder quantity multiplied by the landed unit cost, including relevant freight and other buying costs. Keep that commitment separate from projected sales revenue; stock may be paid for before it sells. For Australian GST planning, business.gov.au says GST is 10% on most goods and services, and registered businesses collect the GST portion as one-eleventh of the sale price. Use the inventory reorder calculator to check the arithmetic, then reconcile it against your actual inventory position and cash plan (Source: business.gov.au (Australian Government)).

Calculate What Stock Costs to Hold

Stock on hand ties up cash at its acquisition cost, not its eventual ticket price. For illustration only, 100 bottles at a landed cost of $18 each represent $1,800 tied up before storage, damage or expiry. Compare that value with the cost of keeping the stock until sale, and separate cash expenses from opportunity cost.

Review the calculation by SKU and holding period. A slow-moving case may look profitable at gross margin level but become unattractive after warehouse space, breakage, out-of-date stock and financing charges. ORVX reports remaining stock value and dead stock; use those figures with your own storage and finance records. The inventory reorder calculator helps test order quantities before more cash is committed.

Plan for Seasonal Peaks in Australia

Compare a SKU’s ordinary baseline with event demand: 20 units per week in comparable non-event weeks versus 35 units per week for three local-event weeks means 15 × 3 = 45 incremental units. Keep this separate from baseline; use completed orders, not assumed holiday or weather uplifts.

For affected weeks, add incremental units to baseline, subtract sellable and confirmed inbound stock, order for supplier and freight lead time, and reserve cash before sales arrive. For weather-sensitive products, use base, higher- and lower-demand scenarios; do not fund the highest without evidence.

Afterwards, compare actual units, stockouts, leftover units and cash tied up with the plan. ORVX reports remaining stock value and dead stock. Use the inventory reorder calculator to test order quantity.

A practical inventory plan links each SKU’s own demand history to local replenishment time, a deliberate safety-stock decision and the cash cost of holding units. Use the reorder point to decide when to place an order, the forecast to decide how much demand is coming, and the holding-cost view to test whether that stock plan fits the store’s cash position.