Low Stock Alert: Set It on Stock You Can Sell
A low stock alert works when it compares each item's reorder point with its sellable position, meaning available stock plus stock on order, rather than stock on hand alone.
By Praveen Nune, Co-Founder & CEO · Updated 9 Oct 2026
Key takeaways
- 01A low stock alert should fire when an item's sellable position (available stock plus stock on order) falls to its reorder point, not when stock on hand does.
- 02Calculate the reorder point per item: average daily sales × average lead time + safety stock. A single number for every product leaves fast sellers short and floods you with alerts for slow ones.
- 03In some tools an item with no reorder point is never flagged as low, so count blank items before you trust any alert.
- 04Test an alert by creating a sales order that pushes available stock below the reorder point while stock on hand stays above it. If nothing fires, the alert is not protecting you.
In this article
- 1What is a low stock alert, and when should it fire?
- 2Why does an on-hand alert stay silent when stock is already promised?
- 3How do you set a reorder point for every item?
- 4What does each tool compare before it sends a low stock alert?
- 5How can you test whether your low stock alert works?
- 6How do we handle low stock alerts and promised stock at Arka Inventory?
- 7Frequently asked questions
A low stock alert that checks only stock on hand fails in a predictable way: it stays quiet while customer orders have already claimed the shelf. The buyer sees a healthy count, and the stockout arrives a week later.
The cause is a mismatch between what the alert measures and what you can promise. Stock on hand counts every unit in the warehouse, including units committed to open sales orders, and ignores units already on their way from suppliers. Neither fact helps a buyer decide whether to order today.
This page gives you the rule that fixes it: a reorder point for every item, calculated from sales, lead time and a worked safety stock method. You get a worked example with the arithmetic, a rule card to fill in, and tests that show whether your current alert would have fired. It is written for owners and stock buyers who want to be told in time.
What is a low stock alert, and when should it fire?
A low stock alert is a notification that an item has fallen to its reorder point, the quantity at which you must order again to avoid running out. It should fire on the item's sellable position, not on stock on hand. Vendors also call the reorder point a "reorder level" or "minimum stock".
Terms used the same way throughout this page:
Definition
Lead time Days from placing an order with your supplier to having the goods in the warehouse.
Definition
Safety stock Spare units that cover demand or deliveries running worse than average.
Definition
Stock on hand Every unit physically in your warehouse, including units already promised to customers.
Definition
Available stock Stock on hand minus units committed to open sales orders.
Definition
Stock on order Units on purchase orders (POs) that suppliers still owe you.
Definition
Sellable position Available stock plus stock on order.
For the formula in more depth, see our guide to the reorder point formula.
Why does an on-hand alert stay silent when stock is already promised?
An alert on stock on hand stays silent when customer orders have already claimed the stock, because those units remain on the shelf until they ship. The sellable position is already below the reorder point, but the alert still sees a healthy shelf.
Here is a worked example. It is our model with illustrative numbers, not data from a real business.
| Input or step | Value | Working |
|---|---|---|
| Average daily sales | 12 units | assumption |
| Highest daily sales | 15 units | assumption |
| Average lead time | 9 days | assumption |
| Longest lead time | 12 days | assumption |
| Safety stock | 72 units | (15 × 12) − (12 × 9) = 180 − 108 |
Reorder point | 180 units | 12 × 9 + 72 = 108 + 72 |
| Stock on hand | 210 units | assumption |
| Committed to open sales orders | 95 units | assumption |
| Alert on stock on hand? | No | 210 is above 180 |
| Available stock | 115 units | 210 − 95 |
| Alert on sellable position (no stock on order)? | Yes | 115 is below 180, a gap of 65 units |
Order today and you wait nine days. At 12 units a day, the 115 available units cover about 9.6 days, so roughly 7 units would remain on arrival (115 − 12 × 9), far below the 72 you meant to keep. If a PO of 100 units is already due, the sellable position is 115 + 100 = 215. That is above 180, so the right action is to check the PO date, not to order again.
The gap is easy to hit with an on-hand alert. With 5 units on hand, a reorder point of 2 and a customer order for 10, the alert does not fire because 5 is above 2, and the buyer is never told. Buyers using some inventory tools report exactly this. TallyPrime's Reorder Status report is built differently: it shows closing stock plus pending purchase orders minus sales orders due (TallyPrime Help).
How do you set a reorder point for every item?
Work out the reorder point separately for each item from its own sales rate, lead time and safety stock, then record it on a rule card. Our recommendation, in order:
Start with your biggest sellers
Take the items that bring in the most revenue and set those first. A stockout there costs the most.Find average and highest daily sales
Divide units sold over the last 30 to 90 days by the days in that period for the average. Take the busiest day in the same period for the highest. Adjust for a known season.Find average and longest lead time
Use the days between order and receipt on your last three or more deliveries.Calculate safety stock
Safety stock = (highest daily sales × longest lead time) − (average daily sales × average lead time). With 15 and 12 units a day and 12 and 9 days, that is 180 − 108 = 72 units. This method is deliberately cautious because it assumes your worst sales day and worst delivery happen together. Keep it for items where a stockout hurts; for slow or cheap items a smaller buffer is usually enough. Our guide to safety stock calculation covers other methods.
Calculate the reorder point
Reorder point = average daily sales × average lead time + safety stock.Name an owner and an order quantity
An alert that reaches nobody, or leaves the buyer to look everything up, is not finished.Review when something moves
Recheck whenever a supplier's lead time or an item's daily sales change noticeably, and monthly for your fastest sellers.
Copy this rule card and add a row per item:
| Item | Avg daily sales | Highest daily sales | Avg lead time (days) | Longest lead time (days) | Safety stock | Reorder point | Alert when sellable position is at or below | Who is told | Supplier | Order quantity |
|---|---|---|---|---|---|---|---|---|---|---|
| Example item | 12 | 15 | 9 | 12 | 72 | 180 | 180 | Purchasing lead | Supplier A | your choice |
What does each tool compare before it sends a low stock alert?
A tool should compare the reorder point with the sellable position and tell the right person in one message. Tools differ, and the difference decides whether the alert helps. These are the behaviours documented on each vendor's own help pages, as of October 2026. We publish this page and are not in the table.
| Tool | What it checks | How you hear about it |
|---|---|---|
| Closing stock plus pending purchase orders minus sales orders due | A Reorder Status report you open yourself | |
| Current stock at or below minimum stock, or projected stock at the end of the lead time at or below minimum stock | Email to the addresses and at the frequency you choose; an optional "notify in advance" alert on the replenish date |
Some tools add a trap: an item with no reorder point set is not indicated when it runs low. For any tool, ask the same three questions: which stock figure does it compare, does it count stock on order, and who receives the message?
How can you test whether your low stock alert works?
Run five tests: three on a single item, one across your whole catalogue, and one across warehouses if you have more than one. Each has a clear pass or fail, and together they show whether the alert would have protected you last month.
Does the alert fire when only available stock is below the reorder point?
Create a sales order that takes available stock below the reorder point while stock on hand stays above it. Pass: an alert arrives within the time your tool promises. Fail: nothing arrives. For a report-based tool such as TallyPrime, pass means the item appears in the Reorder Status report with a shortfall.
Does the alert stop once a purchase order covers the gap?
Raise a PO large enough to lift the sellable position above the reorder point. Pass: the alert stops, or says a PO is due. Fail: it keeps telling the buyer to order again.
Does any active item have no reorder point?
List every active item with no reorder point. Pass: the list is empty. Fail: any item on it, because in some tools such an item is never flagged as low, and in any tool you cannot rely on a threshold that was never set.
Does the alert give the buyer enough to place the order?
Read the message the buyer receives. Pass: it names the item, available stock, reorder point and supplier, so the PO can be raised without opening another report. Fail: the buyer must look anything up.
Does the alert name the warehouse that is short?
With more than one warehouse, drop one below its reorder point while the total looks fine. Pass: the alert names that warehouse. Fail: it stays silent because the total is healthy.
How do we handle low stock alerts and promised stock at Arka Inventory?
We notify your team when items approach or fall below their minimum stock levels, when stock arrives for back-ordered items, and on other inventory movements. Our Inventory Alerts are real-time, so operations, sales, fulfilment and service work from the same signal. Arka Inventory is built natively on Salesforce, so inventory sits beside your sales records.
Promised stock is handled separately from the alert, which is the point of this page:
- Committing stock to orders. We commit inventory to orders and let you allocate or reallocate it by delivery date, so what is promised stays distinct from what is on the shelf.
- Visibility across warehouses. Your team sees stock across all warehouses, what is on order and expected lead times, which are the inputs the rule card needs.
- Realistic promises. Sales teams see what they can confidently promise, taking existing commitments and incoming supply into account.
Use the rule card to decide each item's minimum, and use these views to read every alert against what is already committed and what is on its way. We also integrate with Tally and QuickBooks Online.
As of October 2026, our plans are priced in US dollars and billed yearly (plans and pricing). Basic is $199 a month with one user licence and includes multiple warehouses, purchase orders and transfers, and inventory alerts. Advance is $499 a month and adds bills of material, production and kitting. Sales Orders are part of Enterprise, which has custom pricing, so tell us how you commit stock to orders and we will confirm the plan that fits.
Setup starts from your inventory, product, warehouse and operational data, and typical onboarding takes a minimum of two weeks, depending on data readiness. Every new account can start with a 15-day free trial with full access and no credit card. To see how it works with your own catalogue, talk to our sales team.
When you are ready to decide how confirmed orders should hold stock, read our guide to inventory reservation rules.
