How do Amazon sellers accurately calculate replenishment time and replenishment quantity

In Amazon operations, “when to replenish goods” and “how much goods to replenish” are crucial decisions. This article will detail solutions to these two problems.

How to calculate replenishment time?

Determine the reorder point (Reorder Point)

The replenishment point is a value. When the inventory level of a product is lower than this value, the replenishment process needs to be started to avoid the risk of out of stock. The replenishment point can be calculated using the following formula:

[ text{Replenishment point} = text{Estimated shipments during the lead time} + text{Safety stock} ]

Step 1: Calculate the estimated shipment volume during the lead time

[ text{Estimated shipments in lead time} = text{Lead time} times text{Sales rate} ]

For example, if the sales rate of product A in the past 30 days is 9.8 pieces/day and the delivery cycle is 65 days, then its estimated shipment volume during the delivery cycle is:

[ 65 times 9.8 = 637 text{pieces} ]

Step 2: Calculate safety stock quantity

[ text{Safety stock} = text{Estimated shipments during the lead time} times text{Safety stock ratio} ]

For product A, if the safety stock ratio is set to 25%, the safety stock amount is:

[ 637 times 0.25 = 159 text{pieces} ]

Step 3: Calculate replenishment points

Add the results from the above two steps to get the replenishment point:

[ 637 + 159 = 796 text{pieces} ]

Step 4: Calculate replenishment time

[ text{Replenishment time point} = (text{Existing inventory} – text{Replenishment point}) / text{Sales rate} ]

Continuing to take product A as an example, assuming that the existing inventory is 537 pieces, then:

[ (537 – 796) / 9.8 = -26 text{days} ]

This means that if the stocking time is 65 days, product A should have been replenished 26 days ago.

How to calculate replenishment quantity?

After determining when to replenish the goods, the next step is to determine the quantity to replenish the goods. Assume that this time we need to replenish 13 weeks of inventory plus a 65-day delivery cycle, a total of 156 days. The estimated replenishment volume is obtained by multiplying the total number of days by the sales rate and adding the safety stock. According to the aforementioned data, the replenishment quantity of product A is:

[ 156 times 9.8 + 159 = 1688 text{pieces} ]

Improve inventory management strategy

In order to better manage inventory, sellers also need to pay attention to the following aspects:

1. Control and improve return on investment (ROI): Monitor inventory data closely and improve ROI by optimizing inventory management.
2. Flexible switching of logistics methods: Choose the most appropriate transportation method according to product characteristics and external environment.
3. Distinguish based on product performance: Add safety stock to products that perform well to ensure that they will not be out of stock.
4. Plan for a rainy day: Have backup supplier plans ready for emergencies.
5. Monitor core data: Regularly check the inventory information in the Amazon seller platform and adjust strategies in a timely manner.