How to set reorder points for China stock

Measure the wait until stock is usable

For each product, record the order release date and the date stock became available to sell. Keep promised dates alongside actual dates, including partial receipts and rejected goods. Use our shipping lead-time guide for the delivery stages; this calculation needs their combined actual duration.

Group comparable orders by factory, route and season. Keep holiday disruption and exceptional delays visible rather than deleting inconvenient results. For unfinished orders, record elapsed time and the latest supported arrival estimate: completed orders alone can hide the longest waits.

Forecast demand during the replenishment window

Use demand records, not sales alone. Flag periods when unavailable stock suppressed sales, record unmet orders, and separate promotions or unusual customer orders from normal demand. Forecast the period when the next delivery will actually arrive, allowing for seasonality and product changes.

For a stable product, average demand per day multiplied by average replenishment time gives a starting estimate. To capture variation, calculate demand across historical windows matching observed lead times. Preserve cases where busy trading and slow deliveries occurred together. With little history, use explicit scenarios and label the buffer provisional.

Choose a service target and test the buffer

Decide whether the target means replenishment cycles without a stockout or the share of requested units supplied immediately. These measures answer different questions. Set targets by the consequences of a shortage, considering customer commitments, substitutes and lost margin.

For a cycle service target, choose the lead-time demand percentile matching that target. The reorder point is that demand threshold; safety stock is the amount above expected lead-time demand. A unit fulfilment target needs a stock-flow simulation that also includes order quantities and shortage sizes.

Replay historical demand and receipts with candidate thresholds, using only information available at each decision date. Compare stockouts, unmet units and average inventory. Reserve later records to check the chosen policy, and retest when demand or delivery performance changes.

Apply the trigger without double counting

Compare the threshold with inventory position: usable stock on hand plus outstanding replenishment quantities minus unfulfilled customer demand. Count each commitment once. Exclude quarantined or rejected stock from usable stock, and record cancellations against the outstanding order.

Check receipt dates as well as totals. An overdue shipment can leave inventory position looking healthy while stock runs out before arrival. Use the factory delay recovery guide when milestones slip. If you review stock periodically, cover demand through replenishment plus the gap until the next review.

Keep the trigger separate from the order quantity. Decide the quantity using the factory's minimum, carton quantities, freight economics, storage and cash limits. Record any rounding adjustment so a larger purchase does not quietly become the new safety-stock target. For a first purchase, see our small stock order budget.

Put a cash limit beside the service target

Calculate cash committed to the buffer by multiplying its units by the cash landed outlay per unit. Use the landed-price guide to identify cost components. Then budget financing or opportunity cost, storage, handling and expected write-offs over the holding period. Cash committed and the cost of holding it are different measures.

Model payment dates as well as inventory value, including deposits and balances paid before stock is sellable. HMRC says UK VAT-registered businesses may be able to account for import VAT on their VAT Return rather than paying it at import. Confirm eligibility before assuming that cash-flow treatment.

Compare candidate buffers against the same service measure and cash budget. If the preferred target is unaffordable, assess smaller releases, better delivery reliability or selective expedited shipments, then retest the whole policy. Assign an owner to review actual arrivals, forecast errors, shortages and cash committed after replenishment.