Target Stock Level Calculator
Target Stock Level FormulaTSL formula is:
TSL = ROP + ROQwhere,
ROP is Reoder Point
ROQ is Reorder Quantity (this is also referred to as Economic Order Quantity
What is Target Stocking Level?
The Target Stock Level (or TSL) is the level of stock that you want to have on hand at most at any given time. This is the last piece of the the process to determine you product inventory levels. As you can see by the graph below, TSL is your Reorder Point + Reorder Quantity (or Economic Order Quantity).. or the sum of your stocking points. For planning purposes a TSL is typically your starting point, or where you want to end the year. Then you will look at your current inventory position and assume you need to buy to get to your TSL (today).
You will want to take into consideration your demand throughout the year to determine how much more you will need to buy throughout the year (and the associated cost to plan) to end the year at your Target Stocking Level. Although, some smaller organizations may not plan to this level of detail and just say that they need to buy their Reorder Quantity when they hit their Reorder Point.