This paper investigates the effects of substitutable demand on stocking control rules and the associated inventory/shortage costs. Results, developed for the limiting case in which all of the substitutable items have the same unit variable cost and shortage penalty, indicate that transferred demand will be of little consequence where both (i) the number of substitutable items stocked is low (say 2 or 3), and (ii) the probabilities that customers will accept substitutes are small. On the other hand, the potential dollar savings in accounting for substitutable demand rise quickly with the number of items stocked; moreover even in the two-item case, when one of the probabilities of the transfer of unmet demand is close to 1.0, the optimal stocking rule is substantially different from the case where the items are treated independently, and substantial savings are possible. Finally, for the case of two items having substitutable demand a reasonable heuristic approach for establishing the values of the control parameters (the order-up-to-levels) is developed and tested. Conceptually and computationally this approach is directly generalizable to the case of more than two items.