How to set par levels for bar inventory

Without pars, the size of each order depends on who does the count that week. If you order too little, you run out on a busy night. If you order too much, you pay for bottles that sit on the shelf for weeks. With a par for each product, anyone can count and write the same order. Setting a par takes three numbers: usage, nights to cover and safety stockExtra stock kept for a week that is busier than normal, or a delivery that arrives late..

Start with usage

Take your house bourbon, in 750 ml bottles. Say you use about 14 bottles a week and open 7 nights. That is 2 bottles a night.

Start with what your counts show the bar actually used:

Weekly usage = last week's count + bottles delivered − this week's count

Use the average of the last 6 to 8 weeks. Counts include spills, compsA drink given away for free, for example to a regular or to make up for a mistake. and pours that are too big. Sales data misses these, so a par built from sales is too low.

Check large differences against your sales, recorded waste and transfers before using them to set a par. Otherwise, counting mistakes or unexplained losses can make your normal usage look higher than it really is.

How many nights must the par cover?

Say you count on Sunday after closing, order on Monday, and the delivery arrives on Tuesday before opening. That delivery must last 7 nights, until the next Tuesday delivery.

But you are also open on Monday night, between the count and the delivery. That night you pour from the bottles already on the shelf. So the par must cover 8 nights, not 7. At 2 bottles a night, that is 16 bottles of bourbon.

Add safety stock

In the same 6 to 8 weeks, your busiest week used 17 bottles, 3 more than your average week of 14. Start with those 3 bottles as safety stock: 16 + 3 = 19. The par for house bourbon is 19 bottles.

Treat the safety stock as a starting point. If deliveries are unreliable or demand varies sharply between weekends, adjust it based on how often you get close to running out. Usage per night is an average, too: a Saturday can use several times what a Monday does.

The par formula

The same calculation works for any product:

Par = usage per night × nights to cover + safety stock
Nights to cover = nights until the next delivery + nights waiting for this delivery
Usage per night = weekly usage ÷ nights open per week

Count only the nights you are open. If you open 6 nights a week, divide weekly usage by 6, and leave the closed night out of the nights to cover.

This par is the amount you order up to at the time of the count, including stock that will be used before the delivery arrives. It doesn't mean you'll have 19 bottles on the shelf when the delivery comes in.

Set every par from usage, not from your shelf space or an old list of pars.

The calculator below starts with the bourbon numbers. Change them to your own.

Turn the count into an order

Now use the par. On Sunday night you count 4 full bottles of bourbon and one bottle about half full. Count open bottles in tenths, so the count is 4.5 bottles. With nothing else on order, subtract the count from the par: 19 − 4.5 = 14.5. Round up and order 15 bottles.

Order = par − count − bottles already on order

Before you place an order, check whether any deliveries are still outstanding. Count confirmed stock that's already on its way, so you don't buy the same bottles twice. Say 4 bottles of bourbon are already on order:

The count plus the order is 19.5 bottles, a little over the par. That is fine: next week's order will be a little smaller.

On Tuesday, after the delivery, the shelf holds about 17.5 bottles, because Monday night used 2. That is expected, not a mistake in the count.

Do the same for every product:

If the supplier only sells full cases, check the case quantity, storage space and how much stock you'll use before the following delivery. Rounding up can make sense, but buying a whole case for a small shortfall may leave you holding more stock than you need.

Write one order for each supplier, with the supplier's own product names and sizes.

A free par sheet

Our free par sheet is a spreadsheet that does this math. For each product, enter the average week, the busiest week, the price per bottle, the nights you are open and your delivery days. The sheet works out the safety stock and the par.

On count night, enter the count and anything already on order. The sheet gives you the order in whole bottles and the cost of each line. The first rows hold sample products, so you can check the math before you add your own.

Download the par sheet (.xlsx)Excel workbook (.xlsx), 10 KB

For other spreadsheet apps, there is a CSV copy of the par sheet.

How much safety stock do you need?

For the bourbon, 3 bottles of safety stock (busiest week minus average week) cover another busy week. Do not keep extra stock all year for a one-off night like New Year's Eve.

If your deliveries often arrive late or with products missing, add one night's usage. For the house bourbon, that is 2 more bottles.

Give the most safety stock to products that many drinks need, like your house gin. Slow-moving products usually need less safety stock, especially when they're expensive. But check how quickly you can replace them. A rare amaro that's essential to a signature cocktail may need a little safety stock even if it sells slowly.

When should you change a par?

Each count before an order also checks your pars. The count should be close to the safety stock plus the usage until the delivery arrives. For the bourbon, that is 3 bottles plus 2 for Monday night, about 5 bottles. So this week's count of 4.5 is normal.

One low week is not a problem. If the count is below 5 three weeks in a row, investigate why. Sales may have increased, deliveries may have been short, or stock movements may not have been recorded. If higher usage is the cause, recalculate the par from the last 4 weeks, so older weeks do not hide the change. If the count is well above 5 three weeks in a row, check whether demand has fallen or the par is too generous before you lower it.

Some changes you can see coming. Recalculate the par when:

• You add a new drink. If it sells 40 a week with 1 oz (30 ml) of amaro in each, add 40 oz (1,200 ml) to your weekly amaro usage. That is about 1.6 bottles of 750 ml.
• Your delivery day changes. The nights to cover change with it.
• A season starts or ends. For seasonal products like Aperol and sparkling wine, use the same weeks last year. After 4 weeks of the new season, switch to the last 4 weeks.

A one-off busy night

For a one-off night, add to one order instead of raising the par. Say a normal Saturday uses 4 bottles of bourbon. A street festival will make this Saturday 50% busier, so plan for 6 bottles. Add 2 bottles to the order that arrives before the festival, and do the same for every product on the event menu. Any leftover bottles raise your next count, so your next order is smaller.

Tell your supplier early, because suppliers can run out in event weeks.

Questions

Sources

1. Chopra, S. and Meindl, P. Supply Chain Management: Strategy, Planning, and Operation. Pearson. The chapter on safety inventory covers the periodic-review, order-up-to policy that the bar par formula follows.
2. Wikipedia, Safety stock.
3. Wikipedia, Reorder point.