My Supplier Gives Better Prices for Larger Orders but I'm Worried About Dead Stock — How Do I Decide the Maximum Inventory Worth Holding?

The sell-through test

The worry in the question is the right one. A lower price per gram only saves money on the grams you use. Every gram that ends up as dead stock was bought at full price and earned nothing. So the question is not "how big is the discount?" but "how much of the bigger pack will I actually use, and is that enough?"

Here is the arithmetic. Buying small as you need it costs your usage times the small-pack price. Buying big costs the big-pack price whatever you use, plus the cost of holding that cash until the stock is used. The big pack wins only when the fraction you use is larger than:

Two quick consequences. A big saving absorbs a lot of waste: at Citronella's 62.3%, you can bin more than half the kilo and still come out ahead. A small saving absorbs none: at Lavender's 3.3%, the carrying cost alone outweighs the saving, and you would need to use more than the whole bottle. That second case covers most of what a candle business buys from CSI, because most of our listed wax, wick and oil prices are flat per unit above the smallest pack. For those lines, the maximum worth holding is set by your reorder point and cycle, not by price; My Candle Business Is Growing but All My Cash Keeps Going Back into Wax, Fragrance Oils and Jars — How Much Raw-Material Inventory Should I Actually Hold? and Should I Keep More Money in Cash or Use It to Buy Larger Quantities of Candle Raw Materials at Better Prices? cover them.

Every real break, tested

Here are CSI's listed lines with a real per-unit break, plus two flat ones for contrast, each run through the test at an example monthly usage. The usage figures are illustrations; put in your own.

Read the table from the top. Citronella is the extreme: its kilo is so much cheaper per gram that the kilo beats 100 g bottles even if you use well under half of it. The Salsa jar 50-pack wins if you use about three-quarters of it within its two and a half months. Honeydew Melon, Verbena and Roasted Coconut need you to use roughly 82–86% of the kilo inside seven to eight months. British Rose needs over 90%. Natural Soy Pearl's 5 kg needs nearly all of it. Lavender, with a 3.3% saving, fails outright.

When the scent might stop selling

The sell-through test asks how much you will use. For a scent with an uncertain future, you do not know. So weigh the outcomes. Take Honeydew Melon at 150 g a month over the next six months, and three example outcomes with example probabilities: it keeps selling (50%), it sells for three months and then stops (30%), or it stops after one month (20%). Compare buying the kilo now with buying 100 g bottles as you need them:

On these example odds the kilo costs ₹611.71 more on average, despite its 22.0% lower rate. It only wins in the good outcome. Keeping the same split between the two bad outcomes, the kilo breaks even when the chance of steady sales reaches about 77%. Below that, bottles as needed are cheaper on average. Above it, the kilo is. The probabilities are yours to judge: a scent with a year of steady sales behind it deserves a high figure; a new launch deserves a low one.

Four caps, one maximum

The sell-through test says whether a bigger pack can pay. The maximum you should hold is the smallest of four limits. Here they are for Honeydew Melon, with example inputs you would replace:

The smallest cap here is the demand cap: 480 g. So the maximum worth holding is about half a kilo, which the 500 g pack covers exactly at the same ₹3.40 a gram as the kilo. The kilo would breach the demand cap and fail the sell-through test on a conservative forecast. Notice that the answer is a quantity, not a pack: once you know it, you pick the pack that matches it. On CSI's catalogue that is often a 500 g, where the break is already fully available.

Holding the line

A maximum is only useful if it is written down and respected. The simplest way is a shelf label with two numbers: the reorder point and the maximum. Stock should never fall below the first or rise above the second. When a supplier offer, a sale or a big order tempts you to go above the maximum, run the tests again with the new numbers before buying.

Review maximums monthly with the rest of your stock numbers. A scent whose sales are rising earns a longer horizon and a bigger maximum; one that is fading earns a shorter one, and at some point the right maximum is zero. I Want to Discontinue a Slow-Selling Candle — How Do I Use the Remaining Fragrance Oil, Wax, Jars and Packaging Without Wasting Inventory? covers using up the last of a discontinued scent's oil, wax and jars, and I Have 30 Candle Fragrances but Most Sales Come from 10 — How Should I Change My Fragrance Oil Purchasing Quantities Based on Actual Demand? covers reshaping purchasing when a third of the range makes most of the sales.

Wax, wicks and jars need less of this treatment on CSI's catalogue, because most are flat-priced and shared by every candle. Their maximum is simply the reorder point plus one cycle, as I Use 50 Kg of Soy Wax Every Month and My Supplier Takes 10 Days to Deliver — At What Inventory Level Should I Reorder? works out for a 50 kg-a-month wax user. The exceptions are jars with a real break, like the Salsa jar's 50-pack, where the same sell-through test applies, and any jar you have not tested, whose maximum is one small pack.

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