Your cash and stock, on one page

1The days a dollar is gone

days gone = days until it lands + half the days to sell the order + days until you are paid − days of supplier credit

Days until you are paid, on Amazon: about 21, the reserve until 7 days after delivery, half the 14-day settlement cycle, and the bank's transfer. Supplier credit: each payment's share × the days after the order it is paid.

cash the cycle holds = units a day × landed cost × days gone

2The low point

Fixed costs leave every day, payouts arrive on their cycle, and a wire leaves all at once. The balance bottoms just after the wire, the day before the next payout.

low point = balance on the wire's day − the wire − costs until the next payout

A profitable listing can still hit zero there. Growth deepens it: the wire grows before the payouts do.

3The reorder point

reorder point = the 95th percentile of units sold over the lead time

With the rate and the lead time both uncertain (the engine lets a lead time vary by 20%). The textbook rate × lead + 1.645 × its spread reads low.

safety stock = reorder point − average units over the lead time

4The order and the wire

order = units a day × (lead time + 30 days)

wire = order × landed cost

days until the wire = (on hand + inbound − reorder point) ÷ units a day

Then a wire every order ÷ units a day. Put each date in the calendar.

5The service level a SKU earns

service level = one short ÷ (one short + one left over)

• One short: the margin lost, plus Amazon's low-inventory-level fee while cover is thin.
• One left over: storage for the cycle, the cash tied up (12% a year), and a 2% write-off a cycle.

Order up to that percentile of demand over the lead time plus a week. Thick margins hold more; thin ones less.

6Hold or liquidate

hold = each month's sales × cash a unit − storage and surcharges on what is left, discounted 1% a month

liquidate = units × price × 10%

The landed cost is sunk under both: count it on neither side. Small units almost always pay to hold; bulky, slow ones past day 271 may not.

7How much cash to hold

Run the cycle many times and read two numbers: the 5th percentile of the low point, and the average of the worst twentieth, which says how bad the bad months get.

cash to hold = balance − the average of the worst twentieth of low points + your floor

Plan on the bad end, not the median.

8Late costs more than early

Each day late spends a day of safety stock before the order is placed. The chance of running out climbs fast past the reorder point.

margin lost = units short on average × margin a unit

Plus what the arithmetic cannot see: lost rank and the low-inventory fee. When in doubt, wire early.