Overview
When inventory is constrained, deciding which stores should receive stock can have a major impact on sales, customer satisfaction, and store appearance. Our new Prioritization Method feature allows you to take control of how inventory is allocated across your network.
Simply navigate to any allocation strategy, make sure the Prioritization Method attribute is added to your view, and select the method. By default, the system utilizes Demand First methodology for all strategies. Please see below for an explanation of the logic we use, as well as an example walking through both methods.
Demand First Prioritization
This method prioritizes delivering the total need to stores with the highest expected demand. Use this when your goal is to maximize sales or meet customer demand where it's projected to be strongest. This is the default optimization method the Toolio allocation engine utilizes.
When to use it:
You're low on stock and want to send inventory where it’s most likely to sell
You're focused on revenue generation or meeting forecasted demand
Example: If Store A is expected to sell 50 units and Store B only 10 units, Store A will be prioritized during allocation. The system will allocate inventory to fully satisfy Store A's total need before prioritizing Store B.
By default, demand first prioritization is used for all allocation strategies. You can change this at any time by selecting the Prioritization Method on an allocation strategy.
Minimum Presentation First Prioritization
This method ensures that every store receives at least enough inventory to maintain a minimum shelf presence or visual merchandising standard, even if it’s not expected to sell as much. When using this prioritization method, the system will compartmentalize need by each location every order period (Order Cycle + SS duration). In doing so, the system will understand:
Presentation need for a location (Min Pres - Inventory)
Demand need for a location (Demand - Inventory)
Total need for a location
You can imagine every location broken down this way for every order period. The system will take the steps as follows:
Prioritize satisfying every location's Presentation need (minimum presentation) before all else
If additional inventory is available, satisfy Demand needs by location in order of the locations with the most forecasted demand
When to use it:
You want consistent branding or product presence across stores
You want to give new items with a fair shot at selling at all stores, before switching to demand first prioritization once you have enough sales history to prioritize the top selling locations
Anytime where presentation matters more than pure sales (e.g., for new product launches, flagship stores, or seasonal displays)
Example: Even if Store B has lower forecasted sales, it's minimum presentation need will still be seen as a priority over the demand need of Store A to receive stock.
Example Scenario
Let’s say you have 100 units of a choice available to allocate in a warehouse, and 3 store locations: Store A, Store B, and Store C. To keep things simple, we can imagine the starting inventory is 0 for all locations. This means that Presentation Need = Min Presentation, and Demand Need = Total Demand for the period.
Each store has the following needs for the upcoming order period:
Store | Presentation Need | Demand Need | Total Need |
A | 10 units | 40 units | 50 units |
B | 15 units | 10 units | 25 units |
C | 5 units | 50 units | 55 units |
Total | 30 units | 100 units | 130 units |
You only have 100 units available, but the total need across all locations is 120 units—so the system must prioritize how to allocate. This is how it would iterate through the steps when Presentation First Prioritization is selected:
Step 1: Satisfy Minimum Presentation Needs First
The system allocates inventory to ensure every store gets at least its Presentation Need:
Store A: 10 units
Store B: 15 units
Store C: 5 units
This uses up 30 units, leaving 70 units remaining.
Step 2: Allocate Remaining Inventory Based on Demand
With 70 units left, the system now looks at the Demand Need for each store and allocates the remaining units to stores with the highest forecasted demand:
Store C has the highest demand (50 units), so it gets the first cut:
Store C: +50 units (now has 5 Pres. + 50 Demand = 55 units total)
70 - 50 = 20 units remaining
Next is Store A (40 demand):
Store A: +20 units (now has 10 Pres. + 20 Demand = 30 units total)
20 - 20 = 0 units remaining
Store A does not fully satisfy demand need
Total Allocation Summary
Store | Total Allocated Units | Breakdown |
A | 30 units | 10 Pres. + 20 Demand |
B | 15 units | 15 Pres. + 0 Demand |
C | 55 units | 5 Pres. + 50 Demand |
In this example, all stores were able to hit their Minimum Presentation thresholds, but due to the limited inventory the system prioritized sending additional units to Store C with the highest demand. Store A received some of its demand need, but not to the full extent, and Store B did not receive any units beyond its presentation need.
Please note that despite having the lowest demand, Store B still received its Minimum Presentation quantities. Had we used Demand First prioritization instead, the result would have been different. Here's what would happen:
Step 1: Rank Stores by Forecasted Demand
Store C (50 units)
Store A (40 units)
Store B (10 units)
Step 2: Allocate Total Need in Order of Highest Demand
Store C gets 55 units → 100 - 55 = 50 remaining
Store A gets 40 units → 50 - 50 = 0 remaining
Store B gets 0 units
In the case where we are prioritized purely off of demand, Store B does not receive any units.
FAQs
What happens if I don't have enough inventory to satisfy the minimum presentation for all stores when using Presentation First prioritization?
The system will prioritize according to demand. i.e. If there are only 10 units left at the warehouse, Store A and Store B both have Min Pres of 10, the system will check which Store has more forecasted demand in the order period to decide. In an unlikely case that this results in another tie, then the system defaults to user defined location priorities from the location table to settle it.
For what period does the system consider when prioritizing locations?
The system looks at every order period independently. The order period is defined by the Order Cycle + Safety Stock duration defined on the strategy. For example, if OC + SS is 2 + 1, the system will calculate every 3 periods to understand the need at each location.
What if I have sales which are directly fulfilled by the source location (warehouse)?
In cases where the source location is also a selling location, the source will always prioritize itself before all else. Regardless of prioritization method, the source will reserve inventory so that it can satisfy its own demand before considering transfer units out.