INVENTORY POLICY VISUALIZATION
Sawtooth Diagram
A sawtooth diagram illustrates inventory movement over time, often showing depletion between replenishment arrivals. Its shape depends on the assumptions about demand, receipts and the stock measure being plotted.
SAWTOOTH DIAGRAM IN PRACTICE
- Define the axesState time, units and stock measure.
- Identify the eventsMark demand, order decisions and arrivals.
- Review the assumptionsCompare the model with actual records.
Use the agreed units, actual records and approved procedures for your operation.
A WORKED EXAMPLE
The order trigger and stock receipt occur at different times.
Inventory declines and reaches a reorder trigger. A replenishment order is initiated, but on-hand quantity continues to change until the actual receipt arrives.
WHAT THIS MEANS FOR YOUR QUOTE
Agree the requirement before comparing quotes
Use the actual shipment, stock and service requirements. Record the billing unit, included work and responsibility for exceptions.
A LITTLE MORE CONTEXT
Questions about Sawtooth Diagram
Does placing an order instantly add on-hand stock?
No.
Must real inventory follow a smooth sawtooth?
No.
Should the plotted stock measure be stated?
Yes.
Source & example notes
Definition and operational example prepared by 3PL Hub. Examples describe hypothetical requirements; verify the actual records and agreed procedures for your operation.
Quantities, costs and scenarios are illustrative, not operating targets, approved handling instructions or guarantees. Source guidance reviewed 23 October 2026.
Last updated: · 3PL Hub
