Reorder point calculator
Find the stock level at which to place an order, so the shelf never empties while you wait for the delivery.
The reorder point is the stock level that triggers a new order. If you order when stock reaches it, the units still on the shelf will last until the delivery arrives.
The part that protects you from stock-outs is the safety stock: the extra units you hold in case sales are faster or the supplier is slower than usual. Enter your peak daily sales and the longest the supplier has ever taken, and the calculator works it out. Leave them blank to get the basic reorder point with no safety stock.
Work it out per product. Fast-moving items with a long wait need a high reorder point. Slow items with a short wait barely need one.
The formulas
- Demand during lead time = average daily sales × lead time in days
- Safety stock = (peak daily sales × longest lead time) − (average daily sales × average lead time)
- Reorder point = demand during lead time + safety stock
- Order quantity = average daily sales × days you want one order to last
A worked example
A product sells 10 a day and the supplier takes 5 days. Demand during the wait is 50. On a bad week it can sell 15 a day and the supplier can take 8 days, so the safety stock is 15 × 8 − 50 = 70. The reorder point is 50 + 70 = 120: place the order when stock drops to 120.
Frequently asked questions
What is a reorder point?
It is the stock level that tells you it is time to order more. When the quantity on hand falls to the reorder point, you place the order, and the stock left covers sales until it arrives.
How do I calculate the reorder point?
Multiply average daily sales by the supplier lead time in days, then add safety stock. For 10 sales a day, a 5-day lead time and 70 of safety stock, the reorder point is 10 × 5 + 70 = 120.
What is safety stock?
Safety stock is the extra inventory you keep to cover a surprise: a busier week than usual or a late delivery. A common way to size it is peak daily sales times the longest lead time, minus normal sales over the normal lead time.
How do I work out how much to order?
Decide how many days one order should last and multiply by average daily sales. If you sell 10 a day and want an order to last two weeks, order 140. Suppliers' minimum quantities and discounts can change this.
How often should I recalculate it?
Whenever sales or lead times change, such as before a season, after a price change or when you switch suppliers. Software that tracks sales per product can keep the numbers current for you.