How should I set inventory forecast weights and days-cover targets?

Inventory forecast weights and days-cover targets should reflect how each product sells and how quickly it can be replenished.

There is no single combination that is suitable for every product or supplier.

What are inventory forecast weights?

Forecast weights determine how strongly different historical sales periods influence forecast weighted daily sales.

For example, MerchantSpring may use sales rates from periods such as:

• The last 7 days
• The last 30 days
• The last 60 days

The configured weights must total 100%.

How should I set forecast weights?

Give more weight to shorter periods when recent sales activity is likely to continue.

This may be appropriate when:

• Demand has recently increased or decreased
• A new sales pattern has become established
• Recent activity better represents current demand
• The product is responding to an ongoing market change

Give more weight to longer periods when they provide a more reliable picture of normal demand.

This may be appropriate when:

• Demand is relatively stable
• Recent activity includes a temporary spike or decline
• A short promotion has distorted sales
• You want to reduce the effect of day-to-day volatility

Demand pattern	Possible weighting approach
Stable, consistent demand	Give more weight to longer sales periods
Sustained recent growth	Give more weight to recent sales
Short promotional spike	Avoid relying too heavily on the shortest period
Highly volatile demand	Use a balanced mix and review it regularly
Recent stockout	Consider whether historical sales understate normal demand

These are general guidelines rather than fixed recommendations.

What is a days-cover target?

The days-cover target is the amount of inventory cover the business aims to maintain.

It should account for the time required to order, produce, transport and receive replacement stock, along with an appropriate buffer for uncertainty.

How should I set the target?

A higher target may be appropriate when:

• Supplier lead times are long
• Demand is volatile
• Supply or transport delays are common
• Replenishment opportunities are limited
• Running out of stock would have a significant impact

A lower target may be appropriate when:

• Stock can be replenished quickly
• Demand is stable and predictable
• The supplier is reliable
• Storage costs are high
• The business wants to reduce excess inventory

The target should balance stockout risk against storage costs and the amount of cash held in inventory.

How does order lead time differ from target days cover?

• Order lead time is how long replenishment takes to arrive.
• Target days cover is how much total inventory cover the business aims to maintain.

Both affect replenishment planning. A product with a long lead time will generally need enough inventory to cover expected demand while the new order is in transit, plus any additional safety buffer.

How should I interpret the colour threshold?

A red or low-cover status means the current days cover is below the configured threshold.

It does not mean that the same number is universally unsafe for every product or supplier.

For example, 30 days of cover may be:

• Too low for stock with a three-month supplier lead time
• Sufficient for stock that can be replenished within a few days
• Too high for a slow-moving product with significant storage costs

Always interpret the status using the applicable forecast settings, supplier lead time and target.

Important note

Review forecast weights and days-cover targets after promotions, seasonal changes, stockouts or material changes to demand or supplier lead time.

Need help?

Contact support@merchantspring.io and include the relevant account, store, ASIN, reporting period, current forecast settings and any helpful screenshots or exports.