Reorder point calculator
Last reviewed
Reorder when stock falls to the sales you expect during the lead time, plus your safety stock.
What is a reorder point?
A reorder point is the stock level at which you place your next purchase order for a SKU. It is set so the new stock arrives just as the old stock runs out, with a safety buffer left over for slow suppliers or a busier-than-usual week.
The reorder point formula
Reorder point = (average daily sales × lead time in days) + safety stock
- Average daily sales: units sold per day over a recent window, such as the last 30 to 90 days. Leave out days the SKU was out of stock, because a stocked-out day records zero sales, not zero demand.
- Lead time: days from placing the order to the stock being sellable. That includes production, shipping, customs and receiving, not just the supplier’s quoted production time.
- Safety stock: extra units that cover demand and lead-time surprises. See safety stock.
Worked example
A SKU sells 12 units a day. The supplier takes 30 days from order to sellable stock, and you hold 90 units of safety stock.
- Lead-time demand: 12 × 30 = 360 units
- Reorder point: 360 + 90 = 450 units
When available stock for this SKU drops to 450, place the order. The stock you have left should cover the 30-day wait, and the 90-unit buffer absorbs a late shipment or a sales spike.
Three mistakes that make reorder points wrong
- Averaging in stockout days. If a SKU sold nothing for 10 days because it was out of stock, a simple 30-day average understates demand by a third. Average over in-stock days only.
- Using the quoted lead time. The supplier’s “20 days” is usually production only. Add freight, customs and receiving, and use what actually happened on your last few orders.
- Ignoring stock already on order. Compare the reorder point against available stock plus open purchase orders that arrive within the lead time. Otherwise you will reorder a SKU that is already on its way.
When one reorder point is not enough
A fixed reorder point assumes demand is steady. For seasonal products, fast-growing SKUs or products sold across several channels, the reorder point should move with the forecast. That is the job of a reorder planning tool: it recalculates every SKU every day from your actual sales, lead times and open orders, then tells you what to buy.
Frequently asked questions
What is the reorder point formula?
Reorder point = average daily sales × lead time in days + safety stock. When available stock falls to that number, place the next purchase order.
Should I use on-hand or available stock?
Use available stock, meaning on hand minus units already committed to open orders. Add stock that is already on order and will arrive within the lead time, or you will reorder twice.
How often should I recalculate the reorder point?
Whenever sales speed or lead time changes. In practice that means at least monthly, and weekly ahead of peaks such as Black Friday or Chinese New Year factory closures.