Walk into the warehouse and count the pumps: twenty-four. That is on hand. It is a true number, and it is the wrong number to quote from.
Three quantities, not one
- On hand is what is physically there.
- Reserved is what an accepted order has already claimed but has not yet left.
- Available is on hand minus reserved: what you can still promise to the next customer.
If a customer approved an order for eight pumps this morning and the van goes tomorrow, the shelf still shows twenty-four. Available is sixteen. A quote that promises twenty is a quote you cannot keep, and you find that out at picking time, in front of two customers.
Why it goes wrong quietly
Most spreadsheets and a lot of software hold one stock figure per product. It gets reduced when goods ship. Between the order being accepted and the goods leaving, which can be days, the figure is a lie, and it lies in the direction that causes overselling.
The fix is to reserve at the moment the order is accepted, not when it ships. Ship draws the reservation down. Cancel releases it. Then available is a live number, and it is the only one a quote should read.
Per location, not per company
A business with three warehouses does not have one available figure. Eighteen in Leeds and none in Bristol is not "eighteen available" to a Bristol customer who needs it tomorrow. Hold stock per location, reserve where the goods actually sit, and let the quote say which location it is drawing from.
What to reorder against
Reorder points are worked out from demand and lead time, and the calculator linked below does that sum, including the part most people skip: a supplier who is sometimes late needs more safety stock than one who never is. But whichever figure the sum gives you, compare it with available, not on hand. Reordering against on hand means reordering late, every time, by exactly the quantity you have already sold.
reorder when available <= reorder point
The one-line test
Ask the person who quotes: "If you promise this today, will it be there on the day?" If the answer needs a phone call to the warehouse, the quoting screen is reading the wrong number.