How do I set my pars and reorder points?

As you probably already know, par levels are the minimum number of inventory you want on-hand so that you don’t run out, but also so you don’t have too much on-hand. For instance, your par level for Absolut vodka might be 4 bottles, which is how many you want to have at the start of the week, or when the delivery is made. Each product or brand should have its own par level.

We will now explain par levels and reorder points. Or if you want to scroll down, we have a short video to explain it as well.

How to Determine Inventory Par Levels

The way we recommend setting your par levels is to determine your weekly usage for each product and then multiply it by 2. That way you’ll have a little extra on hand in case you have a busy week. Some people like to go a little leaner and will multiply it by 1.5. For instance, if you determine that you go through 4 bottles of Grey Goose per week, you par level for Grey Goose would be 8.

What is a Reorder Point?

A reorder point tells the software when it’s time to order more. That means when the inventory count gets below the reorder point, it triggers the software to place that product on the purchase order, which tells you exactly how much to order to get back above par.

For instance, in our above example with Grey Goose you might set the reorder point at 3, meaning once the inventory count for Grey Goose drops below 3, the software knows to order more. So if you count your inventory and you have 3.4 bottles of Grey Goose, it won’t show up on the purchase order because the count has not dropped below. However, if the inventory count is 2.25, then the purchase order will tell you to order 6 bottles to get back to the par level, which is 8.

How to Determine the Reorder Point

This is a matter of preference. Some owners like to let their inventory shrink down a bit before they reorder so they aren’t just reordering a bunch of one-bottle orders. In the above example, it’s set at 3, which is letting the stock get fairly low. Other owners want their stock full all the time. In this case, you should just make your reorder points the same as your par level. So in the case of Grey Goose, if both the par and reorder point are 8 and your inventory count is 7.2, the purchase order will tell you to order one bottle of Grey Goose to get back to par.

Here is a quick video to explain it all and give you a visual.

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