Quick Summary: The Model Stock Level represents the ideal average stock holding that balances financial and service goals. Calculations differ for Stocked, Non-stocked, Zero Policy, and Obsolete items.
What Is the Model Stock Level? (Your “Sweet Spot”)
When you think of a “model,” you think of something ideal—a level you strive to. In inventory, the Model Stock Level is exactly that: the “sweet spot” in your replenishment cycle where you have just the right amount of stock on hand.
We care about the Model Level because it represents the average investment in inventory you need to cover your risks. At this level, you are most likely to balance competing business needs:
Finance: You are not overspending or tying up working capital.
Logistics & Warehousing: You are not taking up excessive warehouse space.
Sales & Marketing: You have enough stock on hand to supply customers and meet demand.
How the App Uses the Model Stock Level
This is a critical concept: since you set the Replenishment Cycle (RC) and you influence Safety Stock (SS) through your policies, you have direct control over the calculated Model Stock value.
Comparing your actual stock holding to this Model Level shows how closely you are executing your own desired plan.
The app considers the Model Stock Level every time a recommended order is given. This means you can generate an order based on the recommendation and know that you are replenishing stock in line with your strategic goals—meeting both working capital and target fill rate targets.
Model Stock Calculation by Stocking Indicator
Stocked Items
For a Stocked item, the inventory cycle is defined by a minimum and maximum level:
Minimum Level = Safety Stock (SS)
Maximum Level = Safety Stock (SS) + 1 Replenishment Cycle (RC)
Model Stock Level = Safety Stock + ½ Replenishment Cycle
Non-stocked and Zero Policy Items
These items are not held in inventory and have no safety stock or replenishment cycle. Therefore, their model stock is:
Model Stock = Half of the current stock on hand
This is a practical compromise between the true target of zero stock and the realities of running down existing inventory. As the stock moves closer to zero, the model will also shift closer to zero.
Example: If a non-stocked item has 7 units on hand, the Model Level will be 3 units.
Obsolete Items
These items will never be replenished, so their ideal stock level is zero.
Model Stock = 0
⚠️ Watchouts
Root Causes Drive High Model Levels: If the Model Level for a stocked item seems high, check its components first. Elevated Safety Stock (SS) from high risk will directly increase the Model Level.
💡 Tips
Model is an Average, Not a Constant: You will only be at the exact Model Stock Level once per cycle due to consumption and receipts. Treat it as the ideal average you are targeting.
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