Every turn of supply chain planning comes with optimizing for the atomic unit that you move along your chain. You know that you typically sell eaches (i.e. individual SKUs) and manufacture eaches; however, in between these steps, the goods moved at each stage are typically packs of SKUs, whether that is a container from your factory, pre-packs or case-packs in your warehouse and to your stores. So, what are all the different concepts that are involved?

Minimum Display Quantities

Let’s start with the end result, which is the Minimum Display Quantity (MDQs). MDQs (aka Minimum Presentation Quantity) are the size runs (i.e. quantity by size) that a store is intended to carry at any point. An MDQ Profile could look like the following:

As you can see, in this example, we’re choosing to ensure that we always have the above range of sizes in stock, depending on the store type. How we make this decision might be based on a desire to carry fringe sizes in certain stores or could be purely based on historical demand that we’ve seen. Also important is the presentation quality and what kind of a product run makes it more aesthetically pleasing in the store.

Regardless of how the MDQ profile is created, an allocator’s goal is to make sure that all the stores with an MDQ profile are always carrying at least the minimum quantities for each of the designated sizes.

Pre-Packs (also known as Carton Quantities)

Once we establish the MDQs to have in the stores, we will figure out how to establish those inventory levels. One can choose to just send eaches to the store, i.e. make decisions SKU by SKU to ensure we’re carrying the right size mix in the store for each choice we’re carrying. This is certainly the most flexible option; however, if you have too many stores, you can imagine that there will be a lot of handling overhead in the distribution center to make sure that we’re shipping out the appropriate eaches. Also, in some cases, the distribution center might not be able to handle eaches, but is better in handling packs of goods.

This is where pre-packs come in. Pre-packs are multiple-sizes of a particular choice added in a pack for inbound fulfillment to DC and outbound to stores. A typical pre-pack for a shirt could look like (1 SM, 2 M, 2 L, 1 XL) making a pack of 6 eaches. This ensures that the unit that we’re moving around to the stores, especially for initial product delivery, is in pre-packs, so that we’ll ensure that each of the stores will get the right size runs. Typically initial allocation is done in pre-packs; however, retailers then break their remaining pre-packs in their warehouse and start shipping eaches to the stores to maintain MDQs in their stores.

Case-Packs

Lastly, in cases where we are sending many units of a single SKU to a store, we’ll get more efficiencies in packing these together. An example of this is where we are shipping bottles of a beverage, if you’re shipping goods to Walmart for example, you’ll be sending these in a case-pack of 24 or 36 to make handling easier. Case packs are very common in fast moving consumer goods (FMCG), beauty, etc; however, not as common in apparel.

Large retailers typically demand fulfillments from their suppliers in case-packs and suppliers typically have to conform to these expectations. Alternatively, some suppliers only fulfill their orders in case packs. In most cases, case-packs are not opened (or broken) until the pack arrives in the store, and in some cases like warehouse retailers (e.g. Sam’s Club, Costco) goods are sold to the end consumer in case-packs. 

Between the two sits the inner pack: a smaller sealed pack inside a case, such as four inner packs of six units inside a 24-unit case. Inner packs let a distribution center or store open the case without going all the way down to eaches, which helps when a store needs less than a full case.

Pre-Pack vs. Case Pack vs. Open Stock

Each pack type trades flexibility for handling efficiency. Here’s how they compare:

The biggest decision for most apparel and footwear planners is pre-pack vs. open stock allocation. Open stock (sometimes called bulk or eaches) means each unit is picked and shipped by size, so every store gets exactly the size mix it needs. Pre-packs ship a fixed size ratio as one unit, which is faster to allocate and cheaper to handle, but the ratio is the same for every store that receives it.

In practice, it isn’t either/or. Most retailers allocate the first delivery in pre-packs, hold part of the buy back as open stock in the distribution center, and use those eaches to refill sizes as they sell.

When to Use Prepacks (and When Not To)

Pre-packs work best when the size mix is predictable and the volume is high enough to absorb a full pack.

Use pre-packs for:

• Initial allocations and new launches, when you need balanced size runs on the floor fast.
• Large store fleets, where picking eaches for hundreds of doors would overwhelm the distribution center.
• Core and basic styles, where size curves are stable season to season.
• Wholesale accounts, where boutique and department store buyers often order in size-run packs.

Use open stock instead for:

• Low-volume stores, where a 12-unit pack is more than the store will sell in a season.
• Extended and fringe sizes, where demand is spiky and a fixed ratio guarantees leftovers.
• Replenishment and chase buys, where you’re refilling the sizes that sold, not the whole run.
• Stores with very different size curves, when you can only build one pack type.

How to Build a Prepack Allocation Strategy

A good prepack allocation strategy starts with demand by size and works backward to the pack.

1. Build size curves by store. Use historical sales by size, adjusted for stockouts, to see how demand splits across sizes. Our guide to building a size curve you can trust covers this step in depth.
2. Group stores with similar curves. One pack rarely fits every store. Store clustering lets you build one pack per cluster instead of one per store. Most retailers find two to three pack types capture most of the benefit.
3. Set the pack size and ratio. Convert each cluster’s curve into whole units that fit a standard pack, like 6, 8, or 12. Pack size optimization walks through the math.
4. Decide how much to pack and how much to hold. Don’t commit the entire buy to pre-packs. Holding part of it as open stock in the distribution center gives you units to chase winners and fill gaps after the first read on sales.
5. Allocate in whole packs, then top up. Send each store the number of packs that covers its MDQ and opening demand, then use eaches to fill any sizes the pack ratio leaves short.
6. Break packs and replenish in eaches. As the season runs, open remaining packs in the distribution center and replenish store by store, size by size.
7. Measure the fit. Track size-level in-stock, sell-through by size, fringe-size leftovers at season end, and store-to-store transfers. If the same sizes keep piling up, the pack ratio needs adjusting.

Summing it Up

As you can see planning out supply chain and allocation is typically more complicated than just planning out the demand for the eaches, and this can get overwhelming as the number of SKU x Location combinations increase.

Getting the pack right is where most of the value is, from the size ratio inside each pre-pack to how many pack types you run and when you switch to open stock.

To test pack mixes on your own data, try the free Pack Size Optimization Tool. For a while this can all be done in Excel; however, at some stage you will need retail planning software to manage this process. If you are at that stage and want to learn how Toolio can help, feel free to reach out to us!