What is a par level?

A reorder point tells you when to order. A par level tells you how much. Reorder points suit shops that order whenever stock runs low. Par levels suit shops with a fixed delivery day, such as a weekly van, where you count, top up and wait for the next visit.

A snack bar gets a delivery every Monday. Its par level for bottled juice is 60 bottles, enough for the week plus a small cushion. On Monday morning it counts 22 bottles.

• Order quantity: 60 - 22 = 38 bottles

The next week it counts 31, so it orders 29. The order changes with sales, but the shelf always returns to the same level.

Take sales between deliveries, add the time the supplier needs, and add a cushion for busy days. For the juice, sales are about 8 bottles a day, with 7 days between deliveries, so 56 bottles, plus a small cushion of 4 to reach 60. Raise it before holidays and lower it for slow seasons. Review it when you keep running out or when stock is left over each week.

• Too high and you hold overstock, with cash tied up and goods going stale.
• Too low and you risk a stock-out before the next van.

Shopkeepa has a low-stock minimum for each product rather than a par level, and a restock list with a suggested order quantity. If you work to par, keep your par numbers beside the list and use them to decide what to order.