# What is Allocation Planning and When Do I Need It?

{% hint style="info" %}
**Quick Answer:** Allocation planning is the process of deciding how to distribute available inventory across multiple locations — warehouses, stores, or fulfillment centers — based on demand at each location. You need it when you have more than one place inventory can go and limited stock that must be divided thoughtfully.
{% endhint %}

**Allocation planning is** a demand-driven distribution strategy that determines how to split existing or inbound inventory across multiple locations to best serve customer demand. Where replenishment planning answers "how much do I need to order?", allocation planning answers "how do I divide what I have?"

Allocation becomes critical as businesses scale beyond a single warehouse or selling channel. Without it, teams default to splitting inventory evenly — which ignores demand differences between locations and leads to stockouts in high-demand locations while low-demand locations hold excess.

## When Do You Need Allocation Planning?

You need allocation planning when:

* [ ] You operate **two or more warehouse locations** and need to decide which products to hold where
* [ ] You supply **multiple retail stores** or wholesale accounts and must decide how to distribute limited stock
* [ ] You use **multiple fulfillment centers** (e.g., East Coast and West Coast 3PLs) and want to route inventory to minimize shipping costs and delivery times
* [ ] You receive **inbound purchase orders** and need to decide where to send stock before it arrives
* [ ] Your inventory is **constrained** — you can't fully stock all locations and must prioritize

## How Allocation Planning Works

{% stepper %}
{% step %}

#### Determine Available Inventory

Start with the total units available to allocate — either current on-hand inventory or inbound stock that hasn't yet been distributed.
{% endstep %}

{% step %}

#### Forecast Demand by Location

Generate a location-level demand forecast for each destination. A central warehouse might show different demand than a regional distribution center, store, or channel.
{% endstep %}

{% step %}

#### Calculate Each Location's Need

Compare the forecast against current inventory at each location. Locations with low coverage relative to forecast demand are prioritized.
{% endstep %}

{% step %}

#### Apply Constraints

Allocation plans must account for:

* Transfer minimums or case pack requirements
* Shipping costs between locations
* Physical capacity limits at each location
* Pre-committed stock for specific accounts or channels
  {% endstep %}

{% step %}

#### Distribute and Track

The allocation plan outputs recommended transfer quantities per location. Teams approve, adjust, and execute the transfers.
{% endstep %}
{% endstepper %}

## Allocation Planning vs. Replenishment Planning

|                         | Allocation Plan                      | Replenishment Plan              |
| ----------------------- | ------------------------------------ | ------------------------------- |
| **Primary Question**    | How do I distribute what I have?     | What do I need to order?        |
| **Inventory Direction** | Outbound (warehouse to locations)    | Inbound (supplier to warehouse) |
| **Inventory Source**    | Existing on-hand or inbound stock    | New purchase orders             |
| **When to Use**         | Before distributing to stores / 3PLs | Before placing supplier orders  |

{% hint style="success" %}
Many brands use replenishment and allocation plans together: replenishment plans to manage supplier purchasing, allocation plans to distribute stock across locations once it arrives.
{% endhint %}

## How Moselle Handles Allocation Planning

In Moselle, allocation plans are created as a **Production Plan** type. When you create an allocation plan, you select the source inventory, define the destination locations, and Moselle uses your active forecast to calculate demand-weighted distribution recommendations.

{% content-ref url="../../planning-and-execution/replenishment/create-a-production-plan" %}
[create-a-production-plan](https://learn.moselle.io/planning-and-execution/replenishment/create-a-production-plan)
{% endcontent-ref %}

{% content-ref url="allocation-plan-vs-replenishment-plan" %}
[allocation-plan-vs-replenishment-plan](https://learn.moselle.io/faq/replenishment-and-allocation/allocation-plan-vs-replenishment-plan)
{% endcontent-ref %}

## Frequently Asked Questions

### Can I manually override allocation recommendations?

**Answer:** Yes. Moselle generates demand-based recommendations that you can review and adjust before finalizing. Pre-committed stock for key accounts or channels can be locked in before the remaining inventory is distributed.

### Do I need separate forecasts for each location to run an allocation plan?

**Answer:** Yes. Location-level demand data improves allocation accuracy significantly. Moselle uses channel and location-level sales history to generate location-specific demand estimates.

### What if one location runs out before the next allocation?

**Answer:** In Moselle, at-risk items are flagged in the replenishment view so you can expedite transfers or trigger emergency reorders before a stockout occurs.