Inventory Management System Requirements Template

Safety stock is the buffer inventory you keep to protect against demand variability and supply delays. The reorder point is the stock level at which you trigger a new purchase order. Reorder point = safety stock + (lead time in days x average daily demand). Safety stock absorbs uncertainty; the reorder point ensures new stock arrives before safety stock runs out.

Show a single aggregated "available" count to the customer. Behind the scenes, route orders to the warehouse closest to the shipping address to minimize delivery time and cost. If the nearest warehouse is out of stock, fall back to the next nearest. Define rules for when to allow split shipments (two packages from two warehouses) vs. waiting for consolidated stock.

Allow backorders only for high-demand, predictable-supply products where customers are willing to wait. Clearly communicate the expected ship date and give customers the option to cancel. Never allow backorders on products with unreliable supply timelines. Track backorder cancellation rate as a health metric. If cancellation exceeds 20%, the wait time is too long.

EOQ balances ordering costs against holding costs. The formula is: EOQ = sqrt(2 x annual demand x ordering cost per order / holding cost per unit per year). In practice, round EOQ to your supplier's case pack or minimum order quantity. EOQ is a starting point, not a precise answer. Adjust based on supplier minimums, warehouse capacity, and cash flow constraints.

Use first-expiry, first-out (FEFO) picking logic instead of standard FIFO. Track batch numbers and expiry dates at the SKU level. Set automated alerts at 30, 60, and 90 days before expiry. Define markdown or donation rules for products approaching expiry. Ensure the [product catalog](/templates/product-catalog-spec-template) data model supports batch-level tracking if you sell perishable goods. ---