Min Max Inventory Formula: Setting Min, Max and the Order

Min-max is the simplest reorder rule with a formula behind it. Each item gets a min, the level that triggers an order, and a max, the level you order back up to. Min = daily use × lead time in days + safety stock. Max = min + daily use × days between orders. When the count is at or below the min, order = max − on hand, rounded up to whole cases. When it's above the min, order nothing. The min is a reorder point under another name; the max keeps you from ordering more than you can sell or store before the next order. Set them from real use, not memory, and check them every season, because a min set in summer runs out in December. In the example below, a corner store sets min and max for four items on its weekly distributor order.

The short version

• Min = daily use × lead time + safety stock.
• Max = min + daily use × days between orders.
• At or below the min: order max − on hand, rounded up to whole cases.
• Above the min: order nothing this time.
• The min is the reorder point; the max stops over-ordering.
• Reset both from real use each season.
• TaroStack suggests reorder points from how stock actually moves, and lists what's due in days of cover. More below.

The formulas

Safety stock itself is in safety stock formula, the reorder point in reorder point example, and the kitchen version in par level vs reorder point.

An example: a corner store's weekly order

Penobscot Corner Store, a made-up corner store in Bangor, Maine, orders shelf goods from a distributor once a week, with delivery seven days after the order. Monday's count and the min and max for four items:

Soup's min is 2 a day × 7 days + 4 = 18, and its max is 18 + 2 × 7 = 32. At 15 on hand it's under the min, so the order is 32 − 15 = 17, rounded up to two cases of 12, 24. Paper towels are at 12, above their min of 10, so they wait a week. The cups and jam are under their mins and round up to one case each. Rounding to cases pushes stock past the max now and then; that's fine, as long as it fits on the shelf and sells before its date. The store's margins by department are in convenience store profit margin.

Get the calculator

Download the min max calculator. One sheet: type each item's daily use, lead time, safety stock, days between orders, on hand and case size; the min, max and order fill in, rounded up to whole cases, with items to order highlighted. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.

Where this stops working

The mins and maxes are only as good as the daily use behind them. Use changes with the season, a new product steals from an old one, and a min set from last spring's sales lets the shelf run dry in a cold snap.

How TaroStack does it

TaroStack sets the reorder line from how stock really moves, and shows what's due.

Reorder points from real use. Reorder points are suggested from how stock actually moves, so the min follows the season instead of last spring.

The reorder list in days of cover. Each item shows how many days the stock on hand will last, with each supplier's lead time and minimum, so what's due this week is a list, not a count of every shelf.

Counts that show the value. A count shows what each difference is worth before you post it, so a wrong on-hand doesn't drive a wrong order.

Counts and the reorder list are on every plan, from $49 a month. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.

Questions people also ask

What is the min max inventory formula?

Min = daily use × lead time + safety stock; max = min + daily use × days between orders; when stock is at or below the min, order max minus on hand.

How do you set minimum and maximum stock levels?

From real daily use, your supplier's lead time, a safety stock for the days use runs high, and how often you order.

What is the difference between min max and a reorder point?

The min is a reorder point; min-max adds a max, the level to order back up to, which sets the order size.

How often should min and max levels be updated?

At least each season, and whenever use changes: a new product, a new customer, or a supplier with a longer lead time.