Reorder point calculator
Reorder too late and you stock out; too early and cash sits idle in inventory. This works out the exact stock level — the reorder point — that should trigger your next purchase order, based on how fast you sell and how long restocking takes.
What your result means
Your result is the stock level that should trigger your next purchase order. When the units you have, plus anything already on order, fall to this number, reorder.
The reorder point has two parts. The first covers the sales you expect while you wait for new stock to arrive. The second is safety stock, the buffer that protects you if sales spike or the shipment is late.
How the reorder point formula works
Reorder point = (Average daily sales × Lead time in days) + Safety stock
- Average daily sales
- units sold per day, averaged over a recent, typical period
- Lead time
- days from placing a purchase order to having stock ready to sell
- Safety stock
- extra units held as a buffer against demand spikes and delays
Use a recent, representative period for daily sales, such as the last 30 to 90 days, and leave out days when the product was out of stock. Those days drag the average down and make you reorder too late.
Lead time should cover the whole wait: supplier production, transit and the time it takes you to receive and shelve the stock. The guide to lead time explains how to measure it.
If you don't know your safety stock yet, the safety stock calculator works it out from your worst-case sales and lead time.
Worked example
Worked exampleExample numbers
These match the calculator's default inputs.
| Input | Value |
|---|---|
| Average daily sales | 12 units |
| Supplier lead time | 14 days |
| Safety stock | 30 units |
- Demand during lead time = 12 × 14 = 168 units
- Reorder point = 168 + 30 = 198 units
When stock on hand plus stock on order drops to 198 units, place the next purchase order.
When to recalculate your reorder point
A reorder point is only as good as the numbers behind it. Recalculate when:
- Sales velocity changes. A product that's picking up after a promotion or press mention needs a higher reorder point straight away.
- Your supplier's lead time changes. Production delays, a new freight route or a new supplier all change the formula.
- Peak season is coming. Demand and lead times both tend to stretch at the same time. The seasonal lead-time buffer calculator sizes the extra stock.
- You change the order quantity. Reorder point tells you when to order; economic order quantity tells you how much.
For most stores, a monthly review of top sellers and a quarterly review of everything else is enough.
Common mistakes
- Comparing the reorder point with stock on the shelf only. Use inventory position: on hand plus already on order. Otherwise you'll reorder while a delivery is on its way.
- Averaging in stockout days. Days with no stock record zero sales and make the product look slower than it is.
- Using the supplier's quoted lead time. Use how long orders have actually taken, including your own receiving time.
- One reorder point for all locations. Each location sells at its own pace and needs its own reorder point.
- Skipping safety stock. Without it, you'll run out roughly whenever demand or lead time comes in worse than average.
FAQ
How do you calculate a reorder point?
Multiply your average daily sales by your supplier lead time in days, then add safety stock. If you sell 12 units a day, restocking takes 14 days and you keep 30 units of safety stock, your reorder point is 12 × 14 + 30 = 198 units.
What's the difference between reorder point and reorder level?
They're the same thing. Reorder point, reorder level and reorder trigger all mean the stock level at which you place your next purchase order.
Should the reorder point include stock that's already on order?
Compare the reorder point with your inventory position, not just what's on the shelf. Inventory position is stock on hand plus stock already ordered but not yet received. Otherwise you'll place duplicate orders while a shipment is in transit.
What if I don't hold any safety stock?
Then your reorder point is just average daily sales × lead time. That means you run out about half the time demand or lead time comes in worse than average, so most stores add at least a small buffer.