Target Inventory Level

  • Updated

At the core of the Remi Replenishment module is the concept of Target Inventory Level.

The Target InStock Position is the level of coverage your business anticipates will be appropriate for each Stock Keeping Unit (SKU). It is represented as a percentage of time that an SKU will be in stock.

The Remi platform offers four default Target Inventory Levels:

  • 95% (Extremely unlikely to stock out)
  • 90% (Highly unlikely to stock out)
  • 80% (Unlikely to stock out)
  • 50% (Decent likelihood of stock out)

Why wouldn’t you want 100% stock coverage at all times?

To guarantee 100% coverage you would face constant issues of overstocking, which is a sub-optimal allocation of working capital. Thus, you must find the appropriate tension with your Target InStock Position: the risk of a stock out versus dead stock.

As illustrated by the graph below, for most businesses, increasing the InStock Position from 95 to 97% is vastly more expensive than increasing it from 85 to 87%. In practice, there are few situations where service levels above 98% can be achieved at the location level.


The appropriate Target Inventory Level is something that will vary from business to business. For example, a pharmacy might be legally obligated to always have certain medicines on hand, as the risk of a stock out could be a matter of life and death. For companies where there is a short turnaround in attaining new stock, e.g., a bakery, 50% stock coverage may be appropriate, as your clientele could largely be an understanding group (or at least open to the idea that their favorite scones might be popular with other people too).

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