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My store report only gives me monthly sales: how do I turn that into the average daily demand the calculator needs?

Divide the units sold in the month by the number of days the product was actually in stock, not by every day of the month. On stockout days a product sells nothing however much people want it, so counting those days drags the average down, the reorder point comes out too low, and the same stockout happens again.

Published · 3 min read

Why stockout days spoil the average

Your store report shows what sold, not what would have sold. If the product was out for five days in the month, the customers who wanted it on those days left or waited, and the report records a zero. Divide the month's sales by 30 and you treat those days as if nobody wanted the product. The result is a loop: stockouts lower the average, a low average gives a low reorder point, and a low reorder point causes the next stockout.

Example: 900 units in a month with 5 days out of stock

You sold 900 units in a 30-day month, but the product was unavailable on 5 of those days. The lead time is 10 days and safety stock 60 units.

Worked example

Over every day of the month: 900 ÷ 30 = 30 units a day, reorder point 30 × 10 + 60 = 360 units.

Over in-stock days only: 900 ÷ 25 = 36 units a day, reorder point 36 × 10 + 60 = 420 units.

The gap is 60 units, the whole safety stock in this example.

With the first figure you order sixty units late, so the safety stock is used up by an ordinary wait, and any delay from the supplier becomes another stockout.

Step by step

  1. From your store report, take the units sold of the product for each recent month, say three months, which gives a steadier average than one.
  2. For each month, count the days the product was actually in stock. If your system does not record that, check when orders arrived and when the product showed as sold out.
  3. Add up the units and add up the in-stock days, then divide the first by the second.
  4. Enter the result as average daily demand in the Inventory reorder-point calculator. It accepts decimals, so an average such as 29.5 units is fine.

Cases that need care

  • If those months include a big promotion or a season, leave it out or calculate it separately, because the calculator assumes steady daily sales.
  • If you report weekly, weekly units divided by the in-stock days of the week gives the same result with finer detail.
  • If your shop is closed one day a week and does not sell online that day either, leave it out of selling days, and count lead time the same way.
  • Once you have the point, compare it with your stock plus anything ordered and not yet received. The calculator does not know your stock.

When stock reaches the new point, send your order with the Purchase-order generator and note the date it arrives. You will need it to count next month's in-stock days and your real lead time.

Common questions

Should I use the whole year's average?

If your sales are steady through the year, that is fine. If they change with the seasons, recent months similar to what you expect are closer to reality.

The product is new, with only two weeks of sales. What then?

Use those two weeks divided by in-stock days, treat the result as provisional, and recalculate after a month when you have more data.