Allocated stock
Stock that's physically on hand but already promised to specific orders — present in the warehouse, but not available to sell to anyone else.
By Oana Bradulet
Allocated stock is inventory that's physically present in your warehouse but already committed to specific orders. The units are there. They're just spoken for.
A SKU might show 1,000 units on hand and 600 units allocated. The 400 unallocated units are what's actually available to promise to new customers — even though the warehouse "feels" full.
The distinction matters because failing to track it is the most common source of double-promised stock and oversold orders.
Why allocation exists
Allocation is the bridge between order receipt and order fulfilment. The moment an order comes in, the system has to set aside the units the order needs — otherwise the next order that comes in might be promised the same stock.
Common allocation triggers:
- Customer order placed (D2C, wholesale, retail PO)
- Internal transfer (warehouse-to-warehouse, warehouse-to-retail-store)
- Reservation (sales rep holding stock for a deal in progress)
- Pre-order (customer paid, product not yet ready to ship)
- Promotional hold (inventory ring-fenced for an upcoming campaign)
Each of these reduces ATP by the allocated quantity.
How allocation interacts with on-hand stock
The basic identity:
Available to Promise = On Hand − Allocated − Safety Stock
Or sometimes:
ATP = On Hand + Inbound (within window) − Allocated − Reserved
The expanded version brings in in-transit inventory you've already paid for and committed against. Operationally this matters because a customer asking "when can I have it?" cares about whether stock is coming as much as whether it's here.
When allocation goes wrong
Three failure modes:
- Allocation locks up unsellable units. A wholesale customer placed a PO 3 weeks ago that's stuck in their AP review. The 500 units allocated to it are sitting unused while D2C demand goes unfulfilled.
- Allocation never gets released. Cancelled orders that don't release their allocation. The system shows units allocated to nothing.
- Allocation isn't honoured. The first order took the stock physically; the second order's allocation showed in the system but had no real inventory behind it.
Each of these has its own fix — allocation policies, automated release rules, allocation-vs-physical reconciliation — but all of them assume someone is watching the gap between allocated and on-hand.
Allocation policies
Larger operations often define explicit rules for who gets allocated stock first when supply is constrained:
- First-come-first-served. Order placed first gets allocated first. Simple, neutral.
- Channel priority. D2C ahead of wholesale, or vice versa, depending on margin and strategic priority.
- Customer tier. Top retail accounts get allocated before smaller ones.
- Margin-based. Highest-margin orders get the stock first.
- Strategic / manual override. Specific customers or campaigns get prioritised regardless of other rules.
Most brands run a hybrid — automated rules with manual override capability for the few decisions that matter.
Allocation in seasonal and promotional contexts
Allocation gets harder during:
- Pre-launch demand. Pre-orders accumulate before stock arrives. Allocation has to bridge the gap between commitment and availability.
- Promotional periods. A flash sale can allocate the entire stock balance in minutes. Without allocation rules, late orders show as in-stock and then get cancelled.
- Wholesale season delivery. Multiple retailers' POs all due in the same week. Allocation has to honour the order in which commitments were made.
These are the situations where allocation policy disagreements between sales, ops, and customer service usually surface.
Allocated stock vs reserved stock vs on-hold stock
Subtle distinctions:
- Allocated — committed to a specific known order or destination
- Reserved — held without a specific order, often for a known upcoming need (e.g. promo)
- On-hold — present but unavailable for any allocation, usually because of QC, damage, or a holding decision
All three reduce ATP. Different governance applies to each.
Common mistakes
- →Reporting on-hand stock without subtracting allocations. The 'available' figure overstates what can actually be sold.
- →Letting cancelled orders keep their allocations. Allocations should auto-release when the order is cancelled or aged out.
- →No clear allocation policy under constraint. When supply is short, the team makes ad hoc calls that breed customer-service problems.
- →Confusing allocated with reserved or on-hold. Each has different release behaviour and different governance.
How Lumina handles allocated stock for scaling brands
Lumina lets you choose how each type of stock behaves in your plan — allocating stock against specific customers or locations, for example — so your stock projection reflects what's genuinely committed and what isn't.
Frequently asked questions
What is allocated stock?
What's the difference between on-hand and allocated stock?
When is stock allocated?
What's an allocation policy?
Why does allocated stock sometimes never release?
Related terms
Available to promise— Available to Promise (ATP)
The quantity of stock that can be promised to new orders right now — what's on hand, minus what's already allocated, plus what's confirmed inbound within the promise window.
On-hand inventory
The total physical units in your warehouses right now — the starting point for every other inventory state, but never the sellable answer on its own.
In-transit inventory
Inventory you own but isn't at your location yet — moving between supplier and warehouse, or between two warehouses you control.
Consignment stock
Stock physically held by a customer or retailer but still owned by the supplier — title transfers only when the customer sells or uses it.
Backorder
An order a customer places for an item that's currently out of stock — to be fulfilled when stock arrives.