Practical guide
Understanding inventory and unit economics — target supplier lead time
Everyday editorial team · GEOINNOVATION CO., LTD · Published · Updated
What this calculation is for
An inventory plan connects expected sales with supplier lead time and safety stock. It can reveal the cash tied up in an order without pretending that future demand is known.
How the method works
Weekly sales times lead-plus-safety weeks gives a reorder threshold. The ordering comparison uses current stock, supplier minimum quantity and unit cost, while unit contribution provides a separate sales-cost reference. The displayed model uses: Reorder point = weekly sales × (lead time + safety weeks); estimate cash required for the order quantity.
A worked example
For an illustrative inventory and unit economics scenario, use Current inventory units: 600 units; Average units sold per week: 90 units/week; Supplier lead time: 4 weeks; Safety-stock weeks: 2 weeks; Wholesale cost per unit: 18 $; Selling price per unit: 45 $; Supplier minimum order quantity: 100 units. The modeled suggested reorder quantity is 100 units. These are example assumptions, not current prices, official benefit amounts or personalized advice.
Assumptions and real-world differences
The suggested order should not be interpreted as a mandatory immediate purchase: review stock coverage and the supplier minimum. Demand seasonality, spoilage, lead-time variability and financing are not forecast. Demand, supplier terms, spoilage, carrying costs and sales seasonality are not forecast.
Solving for supplier lead time
This reverse calculation searches for a supplier lead time that makes the model’s headline measure approach your target. Set a lower and upper search bound, leave the other assumptions consistent, and inspect the achieved result and target difference. The returned number is an input, not the original model’s output. A bounded solution can be approximate when the allowed input step rounds values.
Reproduce this tool’s example
These fixed example inputs are independent of edits you make above. Enter them in this tool to reproduce the result, then replace them with your own assumptions.
- Target: suggested reorder quantity
- 100
- Minimum supplier lead time
- 2 weeks
- Maximum supplier lead time
- 6 weeks
- Current inventory units
- 600 units
- Average units sold per week
- 90 units/week
- Safety-stock weeks
- 2 weeks
- Wholesale cost per unit
- 18 $
- Selling price per unit
- 45 $
- Supplier minimum order quantity
- 100 units
Required supplier lead time: 2 weeks
Closest modeled result: 100 units.
- Target headline value: 100
- Calculated headline value: 100 units
- Absolute target difference: 0
Frequently asked questions
- Does an order quantity prove I need to buy today?
- No. Compare current stock with the reorder threshold and actual lead time before placing an order.
- Which inputs should I check before using this inventory and unit economics estimate?
- Check current inventory units, average units sold per week, supplier lead time, safety-stock weeks, wholesale cost per unit, selling price per unit, supplier minimum order quantity. Match each field’s unit and time period, then compare the detailed rows rather than treating the headline alone as the complete answer.
- Why might there be no exact required supplier lead time?
- The target may be outside the search range. Rounded outputs, whole-item counts, tax thresholds and flat responses can also prevent an exact solution. Bisection requires a monotonic response within the chosen range; do not interpret a failed search as a real-world impossibility.