Business

Reorder Point Calculator

Find the inventory level that triggers a new purchase order — sized to avoid stockouts during supplier lead time.

Quick Answer

Reorder Point = (Avg Daily Demand × Lead Time) + Safety Stock. Place a new order when inventory drops below this level.

Inputs

Reorder Point
775 units
Status
Reorder Now
Days of Stock
10

Formula: (50 × 14) + 75 = 775 units

Days until reorder needed: Reorder now

About This Tool

The Reorder Point Calculator implements the standard inventory replenishment trigger formula. Reorder point answers the most basic question in inventory management: when do I place a new order? Set it too high and you tie up working capital in unnecessary inventory. Set it too low and you stock out before the new shipment arrives. This tool finds the sweet spot.

The Standard Formula

Reorder Point = (Average Daily Demand × Lead Time in Days) + Safety Stock. The first term covers expected demand during the supplier lead time. The second term absorbs variability — both demand spikes and supplier delays. A SKU selling 50 units/day with a 14-day lead time consumes 700 units during reorder. Adding 75 units of safety stock yields a 775-unit reorder point.

Why You Need Safety Stock in the Formula

If demand were perfectly stable and lead time were exactly 14 days every time, you could reorder at 700 units and the new shipment would land exactly when you ran out. Reality has variance. Demand spikes during promotions, weekends, and seasonality. Suppliers ship late, customs delays, freight gets stuck. Safety stock absorbs both. Without it, you stock out in 50% of replenishment cycles. With it, you stock out at most (1 - service level)% of cycles.

Reorder Point vs. Reorder Quantity

Reorder point answers when. Reorder quantity (often calculated via Economic Order Quantity formula) answers how much. The two work together. Reorder point triggers an order. Reorder quantity is the size of that order, optimized to balance ordering cost against carrying cost. Most small ecommerce businesses use simple rules (order 30, 60, or 90 days of stock) rather than calculating EOQ formally.

Multi-Echelon and Made-to-Order

The simple formula assumes a single warehouse and steady-state demand. For multi-warehouse operations, calculate reorder point per location. For made-to-order or seasonal products, use peak-period demand rather than annual average. For products with very long lead times (12+ weeks), consider longer planning horizons and more safety stock — variance compounds with time.

Related Tools

See also our safety stock calculator, days of inventory calculator, ABC inventory analyzer, AOV calculator, and dropshipping margin calculator.

Frequently Asked Questions

What is a reorder point?
Reorder point is the inventory level that triggers a new purchase order. The formula is: Reorder Point = (Avg Daily Demand × Lead Time) + Safety Stock. When stock drops below this level, place an order. The point is set so that incoming inventory arrives just before existing stock runs out, factoring in the safety buffer to absorb demand and lead time variability.
How do I calculate the right reorder point?
Reorder Point = Demand During Lead Time + Safety Stock. For a SKU selling 50 units/day with a 14-day supplier lead time and 75 units of safety stock: Reorder Point = (50 × 14) + 75 = 775 units. When inventory hits 775, place a new order. The new shipment arrives 14 days later, by which point you should have ~75 units (your safety stock) remaining.
Should I use the same reorder point for every SKU?
No — every SKU has different demand patterns and lead times. A fast-mover with stable demand and short lead time has a low reorder point. A slow seasonal item with long supplier lead time has a higher one. Use ABC analysis to prioritize: A items (top 80% of revenue) get tight tracking with conservative reorder points. C items (bottom 5%) can use simpler rules or even consignment models.
What if my supplier lead time varies?
Use the maximum reasonable lead time, not the average, when lead time variance is high. Or use the safety stock formula that accounts for lead time variability: Safety Stock = Z × √(L × σ_d² + d̄² × σ_L²). For overseas suppliers with 4-8 week lead time variance, this matters more than demand variance and significantly increases the required buffer.
How often should I recalculate reorder points?
Quarterly for stable products, monthly for fast-changing categories or high-velocity SKUs. Reorder points should respond to: demand trend changes (growth or decline), seasonality, supplier lead time changes, and service level adjustments. Many ERP and inventory management tools auto-recalculate based on rolling 90-day demand. If your business is small, a quarterly spreadsheet review is sufficient.

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