The reorder point is the stock level at which a new order should be placed so that stock arrives before you run out. It equals the demand expected during the supplier lead time plus a safety stock buffer.
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Reorder Point Calculator
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Estimates for planning only. Results depend on the accuracy of the inputs and the assumptions of the standard formula.
The reorder point formula
Reorder point = (average daily demand x lead time in days) + safety stock
The first part is the demand during lead time, the stock you expect to use while waiting for the order. The second part protects against demand spikes and late deliveries. Use the same unit for demand and lead time, for example units per day and days.
If you track inventory position (stock on hand plus open purchase orders), place an order when that position falls to or below the reorder point.
Worked example
A part sells 50 units a day. The supplier lead time is 14 days and safety stock is 120 units.
- Demand during lead time = 50 x 14 = 700 units
- Reorder point = 700 + 120 = 820 units
When inventory position reaches 820 units, place a new order.
Tips for using the result
Review reorder points when demand or lead times change, especially around seasons, promotions and supplier changes. A reorder point that was right last year may cause stockouts or excess stock today.
Use the actual lead time, including supplier processing, transport and receiving, rather than the quoted time. Track late deliveries, and add them to the safety stock calculation if they are common.
Pair the reorder point with an order quantity rule such as economic order quantity. Related guides: inventory and warehousing.
Common questions
What is the difference between reorder point and safety stock?
Safety stock is the buffer held for uncertainty in demand and lead time. The reorder point is the trigger level and includes both that buffer and the expected demand during lead time. Safety stock is one component of the reorder point, not a substitute for it.
Should the reorder point include stock already on order?
Compare the reorder point with inventory position, which is stock on hand plus open orders minus backorders. Comparing with on-hand stock alone makes the system reorder again while an earlier order is still in transit, creating excess stock and tying up cash.
How often should I recalculate it?
Recalculate whenever demand patterns or supplier lead times change, and at least on a regular schedule such as quarterly for important items. Fast-moving items and items from unreliable suppliers deserve more frequent checks than slow, stable ones.
What lead time should I enter?
Enter the measured lead time from order placement to goods available for sale, including supplier processing, transit, customs where relevant and receiving. Use the average of recent actual receipts rather than the supplier's quote, and put variation into the safety stock.
Can I use the same reorder point for every location?
Only if demand and lead time are the same at each location, which is rare. Each warehouse or store sees its own demand pattern and its own replenishment time, so calculate the reorder point separately for each stocking location.