Shelf days are usually the biggest piece of a DTC brand’s cycle, and they’re driven by how much you buy at once. Order six months of stock and the average unit sits for three. The supplier’s price break pulls the other way.

The oldest formula in inventory

In 1913 an engineer named Ford Harris published “How Many Parts to Make at Once,” the first statement of what became the economic order quantity Published. It balances the fixed cost of each order against the cost of carrying each unit. Most brands understate the carrying cost by counting only warehouse fees. It also includes what the cash could have done instead, plus markdowns and write-offs on stock that aged. My planning figure is 30% of unit cost per year unless you’ve measured your own, higher for fashion and anything with a date on it.

When the price break is worth it

Say a product sells 1,000 units a month. The supplier quotes $10.00 a unit at a 6,000-unit minimum, or $10.80 at 2,000.

On these numbers the big order wins, narrowly: it saves $4,800 on the unit price and costs $2,880 more to carry. But the smaller orders free about $19,200 of cash on average, and if demand falls after the first two months, the big order leaves you holding four months of stock at a lower sales rate while the small ones let you stop. Peloton’s inventory in chapter 5 is what that risk looks like at scale.

There’s a quick rule for any price break. Take the bigger order only if its discount is larger than your yearly carrying cost times the difference in months of stock between the two orders, divided by 24. Here: 30% times (6 minus 2) divided by 24 is 5%. The discount is 7.4%, so the big order passes, if your demand is steady and the product doesn’t age. At a 45% carrying cost the break-even is 7.5% and it’s a coin toss Derived.

A minimum order quantity is a price. Pay it only when the discount beats what the cash and the risk of unsold stock cost you.

Get the price without the quantity

The best answer is often neither order. Ask for the 6,000-unit price on a 6,000-unit commitment, shipped in three releases of 2,000, each paid when it ships. The supplier gets volume and planning certainty; you get the price and a third of the stock at a time. Other ways to buy less at once:

• Split the minimum across variants. 2,000 per style is different from 2,000 across five colors. Ask which you’re quoting.
• Hold components, not finished goods. Bottles and labels in bulk; fill in smaller runs.
• Fast freight for fast sellers. A small air top-up can save a stockout and a bigger ocean order.
• Cut the tail. Every minimum met on a slow product is months of cash. That’s the Costco lesson from chapter 4.

Smaller orders need reliable lead times and a forecast updated weekly, or they become stockouts.

Do this

• For your next three purchase orders, write down the months of stock each buys and run the price-break rule against the next smaller option. Then ask each supplier for the larger order’s price on scheduled releases. The worst answer is no.