Cycle Stock

Cycle stock is the inventory component that arrives at the start of each order cycle and is consumed linearly until the next replenishment. Under the classical Wilson (1934) EOQ assumptions — constant demand, instantaneous receipt — stock jumps to Q on order arrival and falls linearly to zero, so the average cycle stock is Q/2. It is the complement of safety stock in the inventory decomposition: average total stock = cycle stock + safety stock + in-transit and seasonal stock when relevant. Cycle stock size depends directly on order quantity, so the EOQ decision is effectively a decision about the cycle-stock level. Ordering in large batches — to satisfy a supplier MOQ or to capture a quantity discount — inflates cycle stock; ordering small and often shrinks cycle stock but increases setup cost and the number of deliveries. The distinction matters in SMB reporting: a complaint of 'too much inventory' usually means high cycle stock (i.e. an order-size or order-frequency problem), while 'constant stockouts' means inadequate safety stock. The two components have different decision levers and therefore different remedies. The capital tied up by cycle stock (H·Q/2) and its warehouse footprint should be tracked in the budget cycle.