Inventory planning
Min/Max Inventory
By the Supply Chain Manager team · Updated October 16, 2026
Min/max inventory is a replenishment rule: when stock falls to the minimum level, order enough to bring it back up to the maximum level.
The minimum works like a reorder point and the maximum caps how much you hold. It is simple, easy to explain to a warehouse team and supported by almost every ERP and inventory system.
Its weakness is that the levels are often set once and forgotten. When demand or lead time changes, a static min and max quietly drift into stockouts or overstock.
How to calculate min/max
When Inventory Position ≤ Min: Order Quantity = Max − Inventory Position
Min/max example
Illustrative numbers: min 200, max 600. Stock on hand plus on order drops to 180, so the order is 600 − 180 = 420 units. If demand has doubled since the levels were set, that 200-unit minimum may now cover only half the lead time.
Why min/max matters for distributors
Min/max is often the starting point for distributors moving off pure gut feel. Setting the min from lead time demand plus safety stock, and recalculating both levels regularly from real demand, keeps the rule honest.
Common min/max mistakes
- Setting levels once and never recalculating them.
- Using on-hand stock instead of inventory position, which triggers duplicate orders while a PO is already in transit.
- Using the same min and max across warehouses with very different demand.
Examples on this page use made-up round numbers to show the calculation. They are not benchmarks or results from real businesses.