At the core, the Inventory Position Formula is a simple equation: On-hand Inventory + Planned Receipts – Open Orders = Inventory Position. In other words, it’s used to determine how much inventory is available to meet demand and ensure that customers don’t experience out of stock situations. Put another way, it’s a tool for businesses large and small to plan ahead and ensure that their inventory is always in the best possible shape. By staying on top of inventory levels through the Inventory Position Formula and other forecasting methods, businesses can optimize their supply chain, maximize customer satisfaction, and ultimately increase profitability.