Cycle Stock Calculator
Optimize your inventory levels by calculating the average stock held during an order cycle.
Calculate from Order Quantity
If you already know your fixed order size (Q), use this simple calculation.
Calculate via EOQ (Economic Order Quantity)
Determine the optimal cycle stock based on demand, setup costs, and holding costs.
Understanding Cycle Stock in Inventory Management
In the world of supply chain and logistics, cycle stock represents the portion of inventory that is expected to be sold or consumed during a specific period, typically between regular replenishment orders. Unlike safety stock, which is a buffer against uncertainty, cycle stock is the predictable inventory required to meet demand under normal conditions.
How to Calculate Cycle Stock
The standard formula for cycle stock is incredibly simple, but it relies on an accurate understanding of your order quantity (Q):
This formula assumes that inventory is consumed at a steady rate. At the beginning of a cycle, you have the full order quantity (Q). At the end of the cycle, just before the next delivery arrives, you have zero. The average of these two points (Q and 0) is Q/2.
A Practical Example
Imagine a retail store that sells specialized mountain bikes. They order 100 bikes at a time from their manufacturer. When the shipment arrives, they have 100 bikes. Over the next month, they sell them until they reach 0 just as the next shipment arrives.
- Order Quantity (Q): 100 units
- Cycle Stock Calculation: 100 / 2 = 50 units
In this scenario, the store holds an average of 50 units of cycle stock throughout the month.
Cycle Stock vs. Safety Stock
It is vital to distinguish between these two components of inventory:
| Feature | Cycle Stock | Safety Stock |
|---|---|---|
| Purpose | Meet regular demand. | Protect against variance. |
| Calculation | Order Quantity / 2 | Statistical Lead Time/Demand Deviation |
| Visibility | Decreases over time. | Remains static (ideally). |
Why Optimize Cycle Stock?
Managing cycle stock is a balancing act. If you order in very large quantities (High Q), your cycle stock increases, which raises your holding costs (warehouse space, insurance, capital tied up). However, if you order in very small quantities (Low Q), your cycle stock stays low, but your ordering costs skyrocket because you are placing orders more frequently.
Using the Economic Order Quantity (EOQ) model helps find the "sweet spot" where the total cost of ordering and holding inventory is minimized, leading to the most efficient level of cycle stock for your business.