1. What is a Par Level Calculator?

Definition: This calculator determines the optimal inventory level (par level) needed to meet demand during lead time while maintaining safety stock.

Purpose: Helps businesses maintain adequate inventory levels to prevent stockouts while avoiding excessive inventory costs.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• Par Level — Target inventory level (units)
• Average Usage — Daily consumption rate (units/day)
• Lead Time — Time between ordering and receiving inventory (days)
• Safety Stock — Buffer inventory to prevent stockouts (units)

Explanation: The formula calculates the expected usage during lead time and adds a safety buffer to account for variability.

3. Importance of Par Level Calculation

Details: Proper par level setting ensures smooth operations, reduces stockouts, minimizes excess inventory, and improves cash flow.

4. Using the Calculator

Tips: Enter your average daily usage, supplier lead time, and desired safety stock level. All values must be ≥ 0 (safety stock can be 0).

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between par level and reorder point?
A: Par level is the target inventory level when restocking, while reorder point is when to place a new order (typically lower than par level).

Q2: How do I determine average usage?
A: Calculate historical daily consumption over a representative period (e.g., 30-90 days).

Q3: What factors affect safety stock?
A: Demand variability, supply reliability, and desired service level impact safety stock requirements.

Q4: Should I adjust par levels seasonally?
A: Yes, review and adjust par levels periodically, especially for seasonal demand patterns.

Q5: How often should I recalculate par levels?
A: Recalculate whenever usage patterns, lead times, or business conditions change significantly.