Inventory Forecasting 101 for Micro-Shops: Avoid Stockouts and Overstock

Inventory forecasting is intimidating, but micro-shops can adopt simple heuristics that work. This guide covers basic forecasting approaches, reorder points, safety stock calculations, and processes to keep inventory lean while ensuring availability for your bestsellers.

"Predictability beats guesswork — even rudimentary forecasting improves the bottom line."

Start with SKU-level basics

Track monthly demand per SKU for at least three months. For new products, use pre-orders, launch-week sales, or historical performance of similar items as a baseline. Calculate average daily usage and use lead time from your supplier to determine reorder points.

Reorder point formula (simple)

Reorder Point = (Average Daily Usage × Lead Time in Days) + Safety Stock

Safety stock can be set as a function of variability. A simple approach: safety stock = average daily usage × backup days (choose 3–7 days depending on supplier reliability).

Batch ordering and EOQ (practical version)

Economic Order Quantity (EOQ) helps balance ordering costs and holding costs. For micro-shops, use a simplified rule: order in batches that align with common price breaks from suppliers while not exceeding 2–3 months of forecasted demand for slow movers.

Handling seasonality

Identify seasonal spikes and pre-order earlier. For holiday-driven categories, increase safety stock and confirm supplier lead times two months in advance.

Inventory reviews and cadence

Set a weekly review for fast-moving SKUs and a monthly review for slow-moving items. Use a simple dashboard that lists on-hand quantity, expected incoming, and days of stock remaining.

When to liquidate slow inventory

If an item sits more than 6 months with low velocity, consider promotional bundles or clearance to free up cash and storage.

Integrations and tools

Start with spreadsheets and move to lightweight inventory apps as you scale. Many e-commerce platforms offer basic inventory alerts; integrate those with reorder workflows to avoid manual oversight errors.

Final checklist

• Track SKU-level daily sales.
• Calculate reorder points using lead time and safety stock.
• Review inventory weekly/monthly and adjust for seasonality.
• Negotiate supplier lead times and MOQs to reduce risk.

Forecasting need not be perfect. The goal is consistent rules and cadence to reduce surprises and free cash for growth investments.