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First off, this is really hard for businesses across the board to figure out. It’s part art and part science. I’ve seen several companies go bankrupt because they ordered too much based on the current demand, then the current demand dried up. I’ve seen businesses flooded with demand and rush order a lot of units at a much higher cost. To try to avoid some of these extreme scenarios, take a look at sales data over the last few months to predict how much you’ll need for the next few months ahead. Take into account all events, promotions, holidays and stops in production.

When you have new products though, you really don’t have any data yet. In this scenario it’s good to keep it small, unless you’re really really confident. Buying inventory is investing in your business and like all investments, there’s some risk there.