Retail resource planning connects what a store expects to sell with the stock, purchasing, receiving, labor and cash needed to support those sales. Begin with one product at one location. A small plan whose quantities and dates you can reconcile is a better starting point for expansion than a large forecast built on uncertain inventory.
Establish the stock you can actually use
Record a product identifier, location, unit of measure and snapshot time. A case of six and six individual units must be distinguishable throughout the calculation. Count stock or investigate discrepancies before making a large replenishment decision.
| Input | Meaning in this guide | Check |
|---|---|---|
| On hand | All physical units at this location. | Reconcile the record with a count and recent receipts or sales. |
| Committed | Units already promised to existing orders. | Identify the orders and avoid counting them again as future new demand. |
| Unavailable | Physical units excluded from sale, such as damage or inspection holds. | Keep these separate from commitments. |
| Free usable stock | On hand minus committed minus unavailable. | This starting quantity must be nonnegative for the simplified example. |
| Eligible incoming stock | Confirmed receipts that arrive before the demand they cover. | Check quantity, date and supplier confirmation; exclude late or uncertain receipts. |
| Future new demand | Expected additional units required after the snapshot. | Exclude existing orders already deducted as commitments. |
System terminology varies. For example, Shopify's inventory-state documentation separates on-hand, available, committed, unavailable and incoming quantities. Map your own system's definitions before using this model, especially if stock is shared across channels.
Choose a demand rate and time horizon
Use a period representative of the coming selling conditions. Examine units sold per day, days out of stock, promotions, returns and unusual orders. Sales during a stockout understate demand because unavailable items cannot generate completed sales in the usual way. A short promotion should not silently become the permanent baseline.
For a fixed review schedule, let L be replenishment lead time and R the time until the next review, both in the same kind of days. An order-up-to target covers expected demand over L + R, plus a chosen buffer. Here the buffer is a planning allowance, not a statistically established service-level guarantee.
Target units = daily new demand × (L + R) + buffer.
Suggested order = max(0, target − free usable stock − eligible incoming stock).
This simplified model assumes existing commitments are fully covered, no additional backlog, a steady demand rate, and receipt timing checked separately. For seasonal items, dated customer orders or variable lead times, build a day-by-day or week-by-week projection instead of compressing everything into one average.
Work through one product and check the dates
| Point in time | Free stock calculation | Projected free units |
|---|---|---|
| Snapshot | 70 − 10 − 5 | 55 |
| After 3 days, before scheduled receipt | 55 − (3 × 7) | 34 |
| After receiving the 20 units | 34 + 20 | 54 |
| After 7 days, before the new order arrives | 54 − (4 × 7) | 26 |
| After receiving the new 42-unit order | 26 + 42 | 68 |
| After 14 days of demand | 68 − (7 × 7) | 19 |
The day-14 projection is five units above the 14-unit buffer because case rounding added five units. The example assumes receipts become usable at the points shown and demand is evenly spread. Compare actual daily demand and receipt times before relying on that cushion.
If the existing 20-unit receipt slips beyond the horizon, exclude it: 112 − 55 = 57, rounded to 60 units. Increasing the order arriving on day seven still cannot solve a shortage that occurs earlier. Inspect the timeline for that problem, then consider an earlier transfer, expedited receipt or revised customer promise.
Download the replenishment example and blank planning record (plain text). It includes these assumptions, calculations, timing checks and a place to record the actual result.
Turn the calculation into a feasible purchase
Check case size, minimum order, shelf life, storage space, receiving workload and cash availability. At a fictional $5 per unit, the 42-unit order costs $210 before freight, tax or other charges. Obtain the actual supplier terms before treating a suggested quantity as an approved purchase.
Use a purchase order to record product, quantity, destination, costs and expected receipt. Shopify's purchase-order guidance illustrates how incoming stock and supplier terms can be recorded. Your own system may divide ordering and transfers differently. Confirm the supplier accepted the order; then receive the quantity actually delivered and inspect its condition.
If space or cash prevents the calculated quantity, record the changed plan and its consequence. A smaller order may require an earlier review or a second delivery. A mathematically correct target is only useful when the store can execute it.
Review exceptions and learn from the result
At each review, compare planned and actual demand, arrival date and usable receipt quantity. Count unexpected shortages, excess stock and emergency orders. Investigate the source: forecast error, late supply, a unit conversion, an unrecorded sale or stock held in the wrong state.
Change one planning assumption deliberately and record why. Increase the buffer only after understanding the uncertainty it is meant to cover. For a broader rollout, group products with similar behavior and give intermittent, perishable or highly seasonal stock a different treatment.
Keep human approval over purchases and customer commitments. Software or AI can summarize exceptions and check arithmetic, but it needs correct dated inputs and someone who understands the operational consequences.