How Much Stock Should a Pharmacy Hold? Par Levels & Reorder Points

Ask ten pharmacies how they decide what to order and most will describe a feeling. The senior technician walks the shelves, notices what looks low, and orders more of it. It works, until it does not. The same gut that overstocks the slow movers runs the fast ones short. Good ordering is not a feeling. It is a simple system built on three numbers, and once they are set the daily order almost writes itself.

In short: hold enough of each product to cover demand over your supplier’s lead time, plus a safety buffer. You set that per line with a par level, a minimum and a maximum, and a reorder point, not by eye. The rest of this guide shows how to work those numbers out from your own demand and lead times.

The two ways ordering goes wrong

Every ordering decision sits between two failures, and gut-feel ordering falls into both at once.

Order too much and you pay to hold it. Carrying inventory costs 20 to 30 percent of its value every year in tied-up cash, shelf space, and shrinkage, and the worst overstock quietly expires before it sells. In Australia an estimated 11.6 million dollars of medicines are discarded each year, most of it still within date, much of it simply ordered ahead of demand.

Order too little and you lose the sale and, worse, the patient’s confidence. Supply is already unreliable: 96 percent of European countries report persistent shortages, and managing those shortages is a discipline of its own. Loose ordering leaves you exposed on both sides, and a system fixes both by naming the point where each risk begins.

The three numbers that run your ordering

Almost every day-to-day stock decision comes down to three figures per product.

• Par level: the target range you want to keep on hand, a minimum and a maximum.
• Reorder point: the stock level that triggers a new order.
• Safety stock: the buffer that absorbs demand spikes and supply delays.

Get these right for your top lines and the order stops being a judgement call.

How to set them

Start from real demand, not memory

Pull the actual dispensing history for each product rather than relying on impression. What you want is the average you move per day or per week, and a sense of how much that varies. A steady antihypertensive and a seasonal hay-fever line behave differently and deserve different settings. Seasonality matters here: set winter par levels for the winter range, not the annual average.

Add lead time to find the reorder point

The reorder point is simply how much you will sell while you wait for the order to arrive, plus your buffer:

Reorder point = (average daily demand x supplier lead time in days) + safety stock

If you dispense 8 packs of a line a day, your supplier takes 3 days, and you hold a 5-pack buffer, your reorder point is (8 x 3) + 5 = 29. When stock hits 29, you reorder, and new stock lands before you run out.

Size safety stock to the risk, not the shelf

Safety stock is where judgement earns its keep. The more a line’s demand swings, and the higher the service level you want on it, the deeper the buffer needs to be. A critical medicine with no easy substitute, or one whose supply keeps wobbling, justifies more; a slow, easily replaced item needs almost none. Resist the urge to pad everything equally, because a blanket buffer across the whole range is exactly how dead stock accumulates. Concentrate the protection where a stockout would actually hurt.

Cap the top with a maximum

The reorder point stops you running out. The maximum stops you overbuying. Set a sensible ceiling per line so a deal on a slow mover, or an over-eager reorder, does not turn into a shelf of stock you will still be holding at expiry.

Review, because demand moves

Par levels are not set-and-forget. Prescribing patterns shift, a nearby clinic changes its mix, a season turns, a medicine goes into shortage. Revisit your settings on your fastest and most expensive lines regularly, and after any big change in demand, so the numbers keep matching reality.

Where Krepko fits

Keeping par levels current by hand is the part that quietly slips, usually living in one senior technician’s head. That is the piece the team behind Emily, our AI voice agent, is building to automate. Krepko is developing an inventory system for pharmacies that reads your real demand and flags a low-stock alert as each line reaches its reorder point. It keeps supplier and lead-time data attached to every product, so par levels stay current on their own instead of living in one person’s memory.

It is in development rather than available today, but if ordering is running on gut feel, it is being built to put a system underneath it. You can join the waitlist to hear when it lands. For the cost side of holding stock, see reducing pharmacy inventory holding costs, and to keep your counts honest enough to trust these numbers, our faster pharmacy stocktake guide.