Shopify inventory glossary

Days of inventory on hand estimates how many days current inventory will last at the current rate of sales.

Dead stock is inventory that has not sold for an extended period and has little chance of selling at full price.

A demand plan estimates what products a merchant is likely to need, when they should reorder, and how much they should buy based on sales history, current stock, supplier lead times, and replenishment assumptions.

Measures the amount of gross profit earned for every dollar invested in inventory.

Inventory turnover measures how many times a company sells and replaces its inventory over a given period, typically a year.

The total annual cost of holding inventory, including capital, storage, service, and risk costs.

Landed cost is the total cost of a product by the time it reaches the warehouse.

Lead time is the total duration from placing a purchase order to the moment inventory is ready for sale.

The portion of a retailer’s budget available for purchasing inventory after accounting for planned sales and stock targets.

Reorder point is the inventory level at which a new purchase order should be placed so that replenishment arrives before existing stock is depleted.

Safety stock is the extra inventory held above expected demand to reduce the risk of stockouts caused by variability in demand or lead times.

A Stocky alternative is a Shopify inventory planning tool or workflow that replaces Stocky functions such as purchase orders, supplier tracking, stocktakes, demand planning, inventory reporting, and replenishment decisions.

Stockout-adjusted sell velocity estimates demand using only the days a product was available to sell, so out-of-stock periods do not artificially lower the forecast.

The percentage of inventory sold during a specific period compared to available stock at the start.