PAR level is an order-up-to stock target. In a periodic review system, the buyer compares that target with inventory position and buys the shortfall, subject to supplier packs, minimums, timing and capacity. PAR is a planning target; it does not guarantee that stockouts cannot occur.
Define the coverage period first
If orders are reviewed every R days and replenishment takes L days, a conventional periodic-review target covers the review interval plus lead time, R + L. A business using “PAR” for stock required at receipt may use a different horizon. State the convention so the receiving-day target is not confused with the order-day target.
Target stock = expected demand over coverage period + safety stock
Order quantity = max(0, target stock − inventory position)
Inventory position = usable on-hand + relevant inbound orders − committed demand
Count each commitment once and assess inbound dates. Stock arriving after it is needed does not cover an earlier shortage. See reorder point for a continuous-review trigger.
Worked example
Assume 18 units of average daily demand, weekly review, a three-day lead time, independent stable daily demand with standard deviation four units, and a selected 90% cycle-service target. These are illustrative assumptions, not recommended settings for every item.
Coverage period = 7 + 3 = 10 days
Expected demand = 18 × 10 = 180 units
Safety stock = 1.28 × 4 × sqrt(10) = 16.19 units
Order-up-to target = ceil(180 + 16.19) = 197 units
If usable on-hand is 70 and relevant confirmed inbound is 40, with no other commitments, inventory position is 110. The shortfall is 87 units. With a 12-unit supplier pack, the buyer might order eight packs (96 units), after reviewing capacity and the extra nine units.
The z-score represents a model's cycle-service target. It is not an observed fill rate or a promise about the next order.
Decay is a separate planning assumption
A daily fractional-loss model can estimate opening stock needed when a portion becomes unavailable over time. It does not establish safe shelf life or permission to use a dated product.
For the recurrence used in LineNow's planning calculation, loss happens before each day's modeled consumption:
I(t + 1) = (1 − d) × I(t) − c
Opening stock = (c / d) × ((1 − d)^(-T) − 1), for 0 < d < 1
Opening stock = c × T, when d = 0
Here c is daily non-decay usage, d is the configured daily loss fraction, and T is the chosen coverage period. At c = 18, d = 0.05 and T = 7, modeled opening stock is about 155.51 units versus 126 without loss: 23.42% higher, before any separate safety buffer or product cap. This assumption must not duplicate waste already included in c.
How LineNow uses the inputs
LineNow's replenishment calculation separates base demand, a capped decay contribution and statistical safety stock. Its configured safety buffer multiplies the statistical safety-stock component; it is not an arbitrary extra unit quantity. The configured order frequency is the horizon for that PAR calculation, so confirm that the setup covers the lead-time and review convention your team intends.
Demand history, counts, manual overrides and insufficient-data fallbacks affect the recommendation. Review the displayed inputs, supplier pack and incoming orders before sending the PO. Real spoilage changes inventory through recorded adjustments; a projected decay allowance is not a physical count.
Put the target into the buying workflow
Use the PAR calculator to explore assumptions, then test the inventory purchasing workflow with an actual receipt and one supplier delay. Revisit the target when demand, lead time, usable stock or the review schedule changes.