Reorder Point Calculator

How to read this number

The reorder point is the stock level at which you place an order, not how much to order. It is built from two pieces. The first is lead-time demand: your average daily sales multiplied by the days a supplier takes to deliver. If you sell 40 units a day and the supplier takes 14 days, you will sell 560 units while the next order is in transit, so 560 is your bare floor with no protection at all. The second piece is safety stock, a buffer that covers the times a delivery runs late.

Safety stock exists because lead times are not a fixed promise. If your supplier usually takes 14 days but sometimes takes 20, the average of 14 will still let you run out on the long ones. The buffer size comes from the service level you choose and the standard deviation of your lead times, which is a measure of how much those deliveries wobble around the average. Zero variability means you trust your supplier completely, and safety stock correctly collapses to zero.

The service level is the honest part of this calculation. Choosing 95% means you are accepting roughly a one in twenty chance of running short during a lead time window. Choosing 98% means roughly one in fifty, and it costs you more cash sitting in a warehouse. This is a trade-off between stockout risk and tied-up cash, and there is no correct setting for every product. High-margin, high-velocity, hard-to-replace lines can justify more buffer than slow-moving stock that would be dead cash if it sat there.

Every number on this page comes from arithmetic on the six figures you entered. The assumptions baked in are these: average daily sales are treated as flat across the window rather than seasonal, so a launch or a sale will distort the result; lead time is measured to the point stock is sellable, not merely shipped; safety stock is rounded up to a whole unit; and days of cover uses only what is on hand right now, not stock in transit.

A worked example

Take the default inputs: 40 units sold a day, a 14-day lead time, 3 days of standard deviation, and a 95% service level. Lead-time demand is 40 multiplied by 14, which is 560 units. Safety stock is the service factor of 1.65 multiplied by 40 multiplied by 3, which is 198 units. The reorder point is therefore 758 units. In plain terms, this store should place an order at the moment its shelf drops to 758 units, because at that point the 560 units of demand it is about to face, plus 198 units of buffer, still covers the days until the delivery lands.

With 120 units on hand and nothing on order, that store is 638 units below its trigger and holds 3.0 days of cover against a 14-day wait. That is the mismatch this calculator exists to expose: 3 days of stock in the building against a 14-day pipeline. The status reads as a stockout likely before the next delivery, because the buffer plus the stock on hand no longer covers the demand that will arrive while the next order is still in transit.

What each service level costs you

Same inputs, three settings, the only thing that changes is how much extra stock you are willing to hold. At 90% the safety stock drops to 154 units and the reorder point falls to 714. At 95% it is 198 units and a reorder point of 758. At 98% it is 246 units and a reorder point of 806. Stepping from 90% to 95% costs 44 more units sitting in stock, and stepping from 95% to 98% costs another 48. The full ladder above updates live against whatever numbers you have typed in.

Read that as a cash decision rather than a maths one. Those extra units are money already spent that is not available for the next order, and for any line that is not consistently selling, they are money that may never come back. If your cash is tight, 90% with a shorter and more reliable supplier is often a better answer than 98% with a sluggish one.

The number almost nobody records

The standard deviation of your lead time is the single most useful number in this whole calculation, and it is also the one most stores never write down. Averages get guessed, and a guessed average lead time is genuinely dangerous because it hides the delays that cause stockouts. Track the date you ordered and the date the stock became sellable for your top ten or fifteen lines, and the variability reveals itself within a quarter. Most operations find the standard deviation is far higher than they assumed, which means their real safety stock need is bigger than the number they are working from today.

What to do next

Put the reorder point into the place where the decision actually gets made, which is your inventory system, rather than in your head. Set the trigger at the number above, then review it whenever average daily sales, lead time, or variability changes, because a reorder point calculated three months ago from last quarter's sales is not the right number today.

Next, separate the lines. One reorder point for an entire catalogue hides the fact that a single product can be doing all the damage. Work out the trigger per product or per product group, weighted by the margin at stake when that specific item goes missing. Then look at the line or lines driving most of your lost sales and check whether the real fix is a buffer, a second supplier, or a shorter lead time. Buying more stock is often the slowest and most expensive of the three options.

Finally, do not read the status badge as a verdict on your operation. This tool tells you where the arithmetic sits on a single product line with the numbers you supplied. It knows nothing about your cash position, your storage limits, or which lines matter most. For the wider picture of where the numbers are leaking, theBreak-Even ROAS Calculator runs the same kind of arithmetic on your ad economics, and theStore Funnel Health Scorecard covers the demand side of the business.