How to Create Stock Levels in an ERP: Available Stock, Reorder Levels and Draft Orders
For traders, distributors and plant stores: set up stock levels so sales sees what it can promise and purchase reorders before a branch runs dry.
If you are working out how to create stock levels in an ERP, begin with what the number is for. Sales wants to know what it can promise today. Purchase wants to know what to order this week. A single on-hand figure for the whole company answers neither question.
In many Indian businesses the stock summary is printed on Monday, a buyer circles the items that look low, and a purchase list is typed from it. Reserved stock is ignored, branch differences are averaged away, and the reorder levels were set when the business was half its size.
This guide explains what a useful stock level contains, how to set reorder levels, an illustrative setup at a Nagpur distributor, and how Apragya's inventory app keeps levels current.
How to create stock levels, step by step
A stock level in an ERP is the quantity of one item in one location, kept current by every receipt, issue and transfer. A useful level has three numbers: on hand, reserved for open orders, and free to sell, which is on hand less reserved.
A reorder level is the point at which you should order again. A common way to set it is average daily use multiplied by the supplier's lead time in days, plus a safety stock for delays and spikes. If an item sells 20 units a day, the supplier takes 7 days and you keep 60 units of safety stock, the reorder level is 20 x 7 + 60 = 200 units.
The reorder quantity is how much you order when the level is crossed. It should cover use until the next order, respect the supplier's pack size and minimum, and not tie up cash in slow items. Set both numbers per warehouse, because a busy depot and a quiet one rarely need the same level.
- Record every item in every warehouse where it is stored, with its opening quantity.
- Reserve stock against confirmed sales orders so free stock is visible.
- Work out average daily use per item and location from recent sales or issues.
- Set the reorder level as daily use times lead time plus safety stock.
- Set a reorder quantity that respects pack sizes and supplier minimums.
- Review the levels each season and whenever a supplier's lead time changes.
What badly set stock levels cost
Stock promised twice
On-hand stock that is already reserved is sold again to another customer.
One branch dry, one overstocked
Company totals hide which godown is actually short.
Weekly list typing
Buyers rebuild the purchase list from a stock summary every week.
Cash in slow items
Old reorder levels keep buying items that no longer sell.
An example: a Nagpur electrical distributor sets its levels
Take an illustrative distributor of wires, switches and fans with a main godown in Nagpur and a depot in Amravati. Its counter staff kept promising fans that were already booked for a contractor, and the depot ran out of wire while the main godown held two months of cover.
Two weeks from a single total to working levels
Day 1
Opening stock loaded per item for each godown.Day 2
Open sales orders reserved against the stock.Day 4
Reorder levels worked out for the top 150 items.Day 5
Lead times and preferred suppliers added to each rule.Day 12
First week of drafted orders reviewed by the buyer.
Within a fortnight the counter saw free stock, not just on-hand stock, so booked fans stopped being promised again. The daily scan drafted a wire order for the Amravati depot while the main godown's surplus stayed put, and the buyer changed only two quantities on the first set of drafts.
How to set a minimum stock level in Apragya
Step 1 of 5
Stock per location
Each item carries an on-hand and a reserved quantity for every warehouse.
- Stock per location: Each item carries an on-hand and a reserved quantity for every warehouse.
- Reservations counted: Stock promised to open orders is shown apart, so free stock is clear.
- Reorder rules: A rule per item and warehouse holds the level, order quantity, preferred vendor and lead time.
- Daily scan: Items below their level are turned into draft purchase orders, and an administrator can run it on demand.
- AI suggestion: An agent proposes urgency and quantity from recent consumption and lead time, with a one-line reason.
Reorder level in ERP against a stock summary
A stock summary tells you what is on the shelf. It does not subtract what is promised, compare each branch with its own rule, or hand the buyer a draft to approve. Those three things are what turn a stock level into a decision.
A printed stock summary, compared with Apragya
| Feature | Stock summary | Apragya inventory |
|---|---|---|
| What is shown | On hand only | On hand, reserved and free |
| Level per branch | One company figure | A rule per warehouse |
| Supplier lead time | In the buyer's head | Stored on the rule |
| Purchase list | Typed each week | Draft orders from the scan |
| Unsellable stock | Counted as available | Quarantine and damaged left out |
| Final call | Buyer's memory | Buyer approves, with an AI reason |
Checked against public information on 16 September 2026.
Reading a stock level report by warehouse
One stock record
Sales, purchase and production read the same balances.
Only sellable stock
Quarantine, returns and damaged locations stay out of free stock.
Stock by warehouse
A report shows each item across every location.
Buyer decides
Drafts wait for a person; nothing is ordered on its own.
Per company
Groups keep each company's warehouses and rules apart.
Access by role
Who may change levels and rules is set per role.
Stock levels sit on warehouses and depend on stock reservation. For the feature itself, read stock levels software, and for the idea behind buffer stock, what is safety stock.
Getting started
- Load opening stock per item and warehouse, not as one total.
- Bring open sales orders in so reserved stock is counted.
- Set reorder rules for the items that make most of your sales.
- Add lead times and preferred suppliers to each rule.
- Review a week of drafted orders before widening the rules.
Start with the fast movers. A good rule on a hundred items beats a guessed rule on three thousand.
What it costs to start
Creating stock levels, answered
Is reserved stock shown separately?
Does the scan place purchase orders by itself?
Can reorder levels differ by branch?
How often should reorder levels be reviewed?
What does it cost to start?
Set levels that sales and purchase both trust
Load stock per warehouse, add reorder rules for your fast movers and review the first drafts.