Imagine having to figure out how many customers are expecting an item that just isn't available. Even worse, credit cards might be debited and days or more might pass before the affected customers could be informed. Keeping separate inventory counts is one of the secrets of effectively managing inventory. These inventory counts monitor available inventory and the on-hand inventory . Also important is setting a critical inventory level for each item.
Available inventory is that which can be sold immediately.
It is the count your shoppers' see on your Web site when they check whether an item is in stock. This count is changed at the warehouse when an order is picked. Available inventory always will show a smaller number of items of a particular SKU than the on-hand inventory. On-hand inventory is the total of a particular SKU that is still on the shelf in the warehouse or your stockroom, or being processed. It consists of the available inventory plus the critical inventory.