You open for the day feeling confident — until a staff member tells you you’re out of a key item. Now you’re scrambling to adjust, rush an order, or explain the delay to frustrated customers.
Running out of supplies during peak hours is more than inconvenient. It disrupts your operations, adds stress to your team, and can hurt your bottom line. That’s where periodic automatic replenishment (PAR) levels come in.
By setting a consistent minimum stock threshold, you can avoid these last-minute surprises, keep operations running smoothly, and spend less time putting out fires. Let’s examine how PAR levels work and how to calculate them.
PAR level explained
A PAR level is the minimum quantity of an item you should always have on hand to meet regular demand until your next delivery. When inventory drops below the PAR level, it’s time to restock.
Par level is used in businesses like restaurants, hospitals, and food and beverage manufacturing — any place that needs the right items available at the right time. For example, a restaurant might set a PAR level of 10 bottles of cooking oil to maintain service during peak hours, and a hospital may keep a PAR level of 200 gloves to avoid interrupting patient care.
The goal of a PAR level is to avoid both stockouts and overstocking. Too little of a product risks delays and upset customers. Too much and you tie up cash and risk spoilage or waste.
Many businesses start by using a spreadsheet or inventory sheet template to set and track their par levels. But as you grow, it’s easier (and more accurate) to use inventory management software. Either way, when done right, par level inventory helps you stay ahead of demand, lower food costs, and make your inventory management system work for you.
PAR level versus reorder point
People often confuse the PAR level and reorder point, but they serve slightly different purposes in inventory management.
PAR level is the ideal amount of stock you want to keep on hand at all times. It’s often used in industries where items must be replenished regularly, sometimes daily or weekly, based on demand and delivery schedules.
A reorder point is the exact inventory level that triggers a new order. It considers your lead time, average sales rate, and safety stock to help you avoid running out of an item.
Think of it this way:
- PAR level tells you how much you should have.
- Reorder point tells you when to reorder.
In settings like a restaurant, you might use PAR levels to manage ingredients delivered multiple times a week, while reorder points are better for items with longer lead times or less frequent deliveries.
Both systems are essential to reduce excess inventory and keep business running smoothly. And when combined with the right inventory software, you can automate much of this process and make smarter, faster restocking decisions.
Benefits of using PAR levels in inventory management
Using PAR levels as part of your inventory management system is a strategic way to streamline operations and avoid roadblocks. Here are some key benefits.
Avoid stockouts and overstocking
Setting a PAR level creates a baseline for the minimum amount of stock you should always have. When your inventory dips below that threshold, you know when to reorder, preventing stockouts that slow operations and disappoint customers. On the flip side, it also helps you avoid overstocking, which can tie up cash flow and lead to excess or expired inventory.
Cut down on waste and spoilage
If you work with perishable items — like fresh food or medical supplies — you know how fast things can go bad. Setting PAR levels helps you order based on real demand and delivery schedules so you’re not overbuying and watching items spoil. Less waste means lower food costs and a smaller impact on your bottom line.
Make ordering easier and more accurate
Guessing how much to order is stressful and prone to mistakes. Orders become more precise when you use PAR levels alongside tools like inventory sheets, sales reports, and point of sale (POS) data.
Work smarter with automation
If you’re ready to increase efficiency, inventory management software can automate the whole process of reordering if you dip below PAR levels. It can send you alerts when it’s time to reorder, track inventory turnover rate, and even forecast your next needs. Tools like Fishbowl’s AI Insights and MRP wizard make it easy to keep your PAR levels spot-on across all your items.
Save money and stay accurate
Keeping the right amount of stock reduces costs tied up in excess inventory. Plus, with accurate PAR level tracking, you gain better control over resources and fewer surprises during audits. It’s about working lean and knowing exactly where your inventory stands.
How to calculate PAR levels
Calculating your PAR level helps you avoid last-minute scrambles and makes sure you always have what you need. Whether you’re managing supplies for a healthcare facility or a warehouse, the basic formula stays the same. Here’s how to calculate PAR levels step by step.
1. Know your average usage
Start by figuring out how much of an item you typically use daily. You can use your sales reports, POS system, or an inventory sheet to find this number. For example, if your restaurant uses eight cartons of eggs daily, that’s your daily average.
2. Consider your lead time
Lead time is the number of days between placing an order and receiving the delivery from your supplier. If your lead time is three days, that means your stock needs to last at least three days while you wait for the next shipment.
3. Add safety stock
To protect against late deliveries or sudden spikes in demand, include a safety stock buffer. This helps prevent stockouts, spoilage, and lost sales due to delays or miscalculations.
4. Plug it into the PAR level formula
Here’s the PAR level formula to use:
PAR level = (Average daily usage × Lead time) + Safety stock
This formula works whether you manually track ingredients or use an inventory management system.
Example
Let’s say you run a bakery that uses five bags of flour daily. Your supplier has a lead time of four days, and you want to keep three bags of safety stock on hand.
PAR level = (5 × 4) + 3 = 23 bags
Aim to keep at least 23 bags of flour in stock at all times. When you drop below that number, it’s time to replenish.
4 PAR level best practices
Once you’ve calculated your PAR levels, the next step is making sure they work for you. Here are a few simple, effective ways to keep your inventory on track and your operations running smoothly.
1. Review and adjust PAR levels regularly
Don’t set your PAR levels and forget them. Your ideal stock quantity can change based on seasonality or even changes in supplier lead times. Build in time — monthly or quarterly — to revisit your inventory sheet or reports and adjust your PAR levels as needed.
2. Use inventory management software to stay organized
Trying to manage everything manually with a spreadsheet can lead to mistakes. Instead, use an inventory management system like Fishbowl to automatically track usage, set alerts for reorder points, and generate real-time reports. With features like AI insights and sales reports, you can accurately forecast demand and optimize your inventory.
3. Always account for safety stock
Even if your supplier is usually reliable, delays happen. That’s why building safety stock into your PAR level calculation is essential. This buffer helps you handle late deliveries or unexpected spoilage so you’re not left scrambling to replenish items at the last minute.
4. Train your team on the process
Your inventory system is only as strong as the people using it. Make sure staff know how to log usage, update inventory sheets, and report low stock. When everyone understands the role of PAR levels in daily operations, it’s easier to avoid both waste and stockouts.
Maintain optimal inventory levels with Fishbowl
Running out of key items or overstocking products that go to waste? There’s a smarter way to manage your inventory — and it starts with accurate PAR levels.
Fishbowl’s powerful inventory management software takes the pressure off manual tracking by giving you real-time visibility and automated tools that do the heavy lifting. Easily monitor usage trends and get ahead of demand before it becomes a problem.
Use built-in reports like Turnover, Aging, Inventory Availability, and Reorder Reports to understand your stock better and make more informed decisions. And with the MRP wizard, you can quickly forecast needs and set reorder points for multiple items in just a few clicks.
Stop guessing. Start scaling. Book a demo today and see how Fishbowl makes managing PAR level inventory effortless.
