Based on your restock settings and historical data, Kapoq's inventory simulator will provide a next order date and a suggested restock quantity. The calculation takes into account your demand forecast, safety stock, lead time, reorder frequency, and case pack quantity (all of which are parameters that you can define), and the calculation includes existing inventory and inbound shipments.
The logic that we're outlining below is showing you how our inventory simulator is working on the backend. Let us walk you through a breakdown of each section of the logic for both the Next Order Date and Restock Units.
You'll notice as we proceed through the examples that we use daily demand in several places. This is based on your chosen demand settings, and does not take into consideration out of stock days. For the latter piece, we do this to ensure that your demand does not become too diluted or drop to zero if you are out of stock for an extended period of time. The ultimate goal is to always remain in stock if possible, and for seasonal products, to be ready for reorder when the selling season comes around again.
We'll start with the Next Order Date since that affects the suggested Restock Units. This is a recommendation for when you should replenish inventory based on your restock settings and daily demand. You can see the calculation in the inventory modal / popup which can be reached by clicking the magnifying glass next to the SKU in the inventory module or by visiting the Inventory tab in a listing detail page:
You'll then see a Next Order Date tab with additional details:
The logic being used for each of the sections in the image above are as follows:
Inventory Level
Inventory Level outlines your current inventory position and how many days of supply you have. This total does not include any units related to customer orders or units are being removed from FBA. Hovering over the icon at the bottom of the section will display a breakdown of your inventory position. Example above, we have a total of 118 units of committed inventory, which is equal to 10.3 days of inventory based on a daily demand of 11.48 units. The formula is: 118 / 11.48 = 10.3
Unfulfillable Demand
Unfulfillable Demand (in both days and units) refers to the number of expected days without fulfillable inventory between today and when the next order arrives at Amazon. This is based on your current daily demand and committed inventory. It's meant to let you know if you're going to have days between now and when your replenishment actually arrives where you may be missing sales. In the example above, we'll have almost 4 days when we'll be out of stock because we neglected to send in our units on time.
Reorder Point
Reorder Point is calculated by adding your Lead Time Days to your Safety Stock Days via your settings. In the example provided above, our lead time is set to 14 days and our safety stock is set to 14 days, so we have a reorder point of 28 days of inventory, or 321.4 units based on our daily demand.
Reorder Point Deficit/Surplus
This last section will tell you if you are under your reorder point or in a good spot based on the other three sections. The formula we use for this is Inventory Level + Unfulfillable Demand - Reorder Point.
If you are over, you will see a future Next Order Date above these four sections. You'll see a surplus number of units and how many days you have until your suggested reorder date.
If you are under, your next order date will show today's date. That means you are under your reorder point and have a unit deficit.
We then use this Next Order Date as part of the logic for the suggested Restock Units.
"Restock Units" is the suggested number of units to include in your shipment, and is based on several factors. You can see the calculation in the inventory modal / popup by selecting the Restock Units tab.
The logic being used for each section in the image above is as follows:
Base Order
Base Order is looking at the demand time between the date your next order is delivered to Amazon and the date the following order is delivered to Amazon. In the example above, this date range is 12/03/23 to 12/24/23, a total of 21 days. This equates to 144.9 units based on a daily demand of 6.9 units. The formula is: 144.9 / 6.9 = 21
Safety Stock Adjustment
Safety Stock Adjustment (or SS Adjustment) references your target Safety Stock setting and compares it to the estimated available inventory at the next delivery based on demand.
The calculation we use here is Target Safety Stock - Estimated Units of Inventory at Delivery = Safety Stock Adjustment.
In the example above, the Target Safety Stock is equal to 144.9 units. The estimated inventory at delivery is 70.8 units.
144.9 - 70.8 = 74.1 units for the Safety Stock Adjustment, which equals 10.7 days of supply based on daily demand.
Total Order
This is the total number of units we're suggesting you order, obtained by combining the Base Order with the Safety Stock Adjustment. For any units that are not whole numbers, we round up to the nearest whole number.
In the example above, we're combining 144.9 units (Base Order) with 74.1 units (SS Adjustment) for a total of 219 units to send to Amazon.
We also take into consideration case pack quantity, and will automatically round the total units up to the nearest multiple of the case pack quantity for you. Because of this, you may see a total units number that is higher than the Base Order + SS Adjustment units.
The basic idea is that the Restock Units are the number of units you have to reorder such that you're projected to hit your safety stock exactly when your next shipment arrives (red arrow in the screenshot above).
If you order less, you'll either fall below safety stock, or will have to send in your next shipment early (if demand matches your forecast).