How Much Inventory Should You Keep in Stock?

"How much should I keep in stock?" and "when should I reorder?" sound like the same question. They aren't, and mixing them up is why a lot of reorder-point math ends up looking wrong when it isn't.

The reorder point is a trigger, a single stock level that tells you when to act. Our reorder point formula guide already covers that number, including how to size the safety-stock buffer inside it. This post answers a different question: how much total stock do you actually need to get through the coming stretch?

Reorder point vs. target stock level

Picture the same SKU from two angles:

• Reorder point — "I have 90 units left. That's my signal to place a purchase order right now."
• Target stock level — "Between now and my next planned order, I need 210 units on hand or on order to avoid running dry."

The reorder point tells you when. The target stock level tells you how much. That's useful even before you're near the trigger, for budgeting a season or a purchase order on a product you're not watching closely.

Both numbers share the same three ingredients (sales velocity, lead time, and a buffer), which is why they get confused. The difference is what each one covers: the reorder point covers only the lead-time window; the target stock level covers that window plus however long until you plan to order again.

The formula

Target stock level = (Average daily sales × Days until next order) + (Average daily sales × Lead time) + Safety stock

Four ingredients:

• Average daily sales — your forecasted demand rate, ideally from a recent 60–90 day window rather than a full year
• Days until next order — how long you're planning to go before the next purchase order for this SKU (weekly, monthly, seasonal)
• Lead time — days between placing that order and having the stock sellable on your shelf
• Safety stock — the same buffer the reorder point uses, sized the same way (see the reorder point guide's safety-stock section — this post treats it as an input, not something to re-derive)

A worked example

Back to "Cedar & Fig, 250g," the same SKU used throughout this site's formula posts, so the numbers stay consistent from post to post.

• Average daily sales: 5 units/day
• Lead time: 12 days (10 days to produce and ship, 2 days to receive)
• Safety stock: 30 units
• Days until next order: the store buys candles monthly, so 30 days until the next purchase order after this one

Target stock level = (5 × 30) + (5 × 12) + 30 = 150 + 60 + 30 = 240 units.

That 240 is the total the store needs, on the shelf plus on order, to reach the next monthly cycle without running short. Compare it to the reorder point of 90 units for the same SKU: 90 is when to act, 240 is how much the whole stretch requires. The 150-unit gap is exactly 30 days of selling at 5 units/day, the stretch a reorder point doesn't cover because it only looks as far as the next delivery.

Factors that change the number

The formula is fixed; the inputs move, and each one moves the target independently.

• Sales velocity shifts. A SKU trending up needs a higher daily-sales input than its trailing average shows, or the target undershoots from day one. A recent, clean sales window matters more here than for a stable SKU.
• Buying cycle length changes. Switching from monthly to quarterly ordering (common with supplier minimum order quantities) triples the "days until next order" term, and with it the working capital tied up in that SKU. That's a trade-off worth naming before you make it.
• Lead time moves. Supplier lead times rarely stay fixed. A busy-season slowdown changes this input mid-cycle, not just at renewal.
• The buffer needs revisiting per SKU. A candle that goes viral for two weeks needs more safety stock than one selling at the same steady rate all year, even at an identical average.

None of these are one-time settings. A target stock level calculated once at the start of the year and left alone describes a store that no longer exists by month three.

Reviewing and adjusting

Recalculating this by hand for one SKU takes a few minutes. Doing it monthly across a real catalog is different: fresh velocity, a check on whether any lead time drifted, a judgment call on whether last month's spike was real. That's the part that quietly stops happening. Most stores don't abandon the formula on purpose; they just get busy, and the spreadsheet numbers stay put while the store underneath them changes.

That gap is what StockCue recomputes automatically. Demand forecasting is on every plan including Free, so the target-quantity math runs against current sales data every night, not what you typed into a sheet three months ago. On Growth, the "why this qty?" breakdown shows exactly which input moved the number.

Frequently Asked Questions

How much inventory should a small Shopify store keep?

Enough to cover expected demand across your next ordering cycle plus lead time, plus a safety buffer for surprises. There's no fixed unit count that applies across stores. The formula is target stock level = (average daily sales × days until your next order) + (average daily sales × lead time) + safety stock. Run your own numbers per SKU rather than copying someone else's target.

What's the difference between a reorder point and a target stock level?

The reorder point is a trigger: the stock level at which you place an order. The target stock level is a destination: how much you want on hand to cover the full stretch until the next order, not just until the next delivery arrives. They share the same inputs but answer different questions: when to act versus how much you need.

How do you calculate future inventory needs?

Take your average daily sales, multiply by the number of days you need to cover (the gap until your next planned order plus the lead time for this one), and add safety stock. That total is the quantity you need on hand or on order to get through the period without running out.

How often should you recalculate how much inventory to keep?

Monthly at minimum for most SKUs, and immediately after any real shift: a sales spike, a slower supplier, a seasonal turn. A target stock level calculated from three-month-old sales velocity is already describing a store that no longer exists.

For the trigger number this post left out, see the reorder point formula guide. For the method behind the sales-velocity number, see comparing forecasting methods, or the complete guide to Shopify inventory forecasting for the full process end to end.