The inventory-cash problem
Running out of a best seller loses sales. Ordering too early ties up cash in stock that may sit for months. The useful decision is therefore not simply 'how much stock do I have?' but 'how long will it last, when must I reorder and how much cash will that order consume?'
1. Calculate sales velocity
Use recent units sold to calculate average weekly or daily velocity for each priority SKU. Adjust for known seasonality.
2. Calculate weeks of cover
Current units divided by average weekly sales gives an approximate number of weeks of stock remaining.
3. Map the full lead time
Include manufacturing, supplier preparation, transit, customs where relevant and warehouse receipt - not just the supplier's production time.
4. Set the reorder point
A simple starting point is expected demand during lead time plus a safety-stock buffer appropriate to the SKU.
5. Calculate the cash requirement
Multiply the reorder quantity by landed unit cost and add deposits, freight, duty and other cash payments. Put those payments into the cash forecast on the dates they actually leave the bank.
6. Separate slow stock from protected stock
Flag products with excessive weeks of cover or weak contribution, while protecting the SKUs where a stockout would materially damage sales or margin.
What to do next
Use the DTC Inventory & Working Capital Control Guide to calculate the operating decision, then link directly to the JEBS E-Commerce/DTC Financial Model to see how inventory and working-capital assumptions affect the wider business forecast.