What this calculator does
The reorder point is the stock level at which a new purchase order needs to go out, so that replacement stock arrives before the shelf runs empty. It accounts for how much stock is used while waiting for a new order to arrive, plus a buffer for the unexpected.
Getting this number wrong in either direction has a cost: set it too low and the business risks stocking out and losing sales while waiting for new stock; set it too high and cash sits tied up in inventory that is not needed yet. The reorder point is the level that is meant to sit between those two failure modes.
The formula
Multiply average daily usage by the lead time in days to get the stock that will be consumed while a new order is in transit, then add safety stock as a buffer against higher-than-usual demand or a longer-than-expected lead time.
| Term | Meaning |
|---|---|
| Reorder point | The stock level that triggers a new order: (average daily usage × lead time) + safety stock. |
| Average daily usage | The typical number of units sold or consumed per day. |
| Lead time | The number of days between placing an order with a supplier and receiving the stock. |
| Safety stock | Extra buffer stock held to cover demand spikes or supplier delays beyond the average. |
The inputs explained
| Field | What to enter |
|---|---|
| Average daily usage (units) | The average number of units sold or used per day for this item. |
| Lead time (days) | How many days it typically takes from placing an order to having stock in hand. |
| Safety stock (units) | The buffer stock held on top of expected usage during lead time; see the safety stock calculator for a way to size this from demand variability. |
When to use it
Setting up automatic reordering
Inventory systems that trigger a purchase order automatically need a reorder point configured for each item; this is the number to put in.
Reviewing reorder points after a lead time change
A supplier that suddenly takes longer to deliver raises the stock consumed during that wait, so the reorder point needs to be pushed up to avoid running out before the new stock arrives.
Deciding how much cash is tied up in buffer stock
Comparing the reorder point against safety stock alone shows how much of that trigger level exists purely to protect against variability, as opposed to covering expected usage during the wait.
Worked examples
Every figure in the tables below is produced by this page’s own calculator at build time, so the numbers and the tool always agree. Select any row to load that scenario.
How the reorder point changes with lead time at a fixed usage and safety stock
A fixed 20 units a day usage and 80 units of safety stock, across a range of lead times.
| Lead time | Reorder point |
|---|---|
| 7 days | 220 units |
| 10 days | 280 units |
| 14 days | 360 units |
| 21 days | 500 units |
| 28 days | 640 units |
| 35 days | 780 units |
How the reorder point changes with daily usage at a fixed lead time and safety stock
A fixed 14-day lead time and 80 units of safety stock, across a range of daily usage rates.
| Average daily usage | Reorder point |
|---|---|
| 5/day | 150 units |
| 10/day | 220 units |
| 20/day | 360 units |
| 30/day | 500 units |
| 50/day | 780 units |
| 80/day | 1,200 units |
Questions
What happens if I ignore safety stock and just use usage times lead time?
That figure only covers the expected case. Any day where demand runs above average, or the supplier takes longer than usual, would push the item to stock out before the next delivery arrives, which is exactly what safety stock is there to absorb.
How often should the reorder point be recalculated?
Whenever usage, lead time, or the desired safety stock changes meaningfully, such as after a seasonal demand shift or a change of supplier. A reorder point set once and never revisited tends to drift out of step with reality.
Does a higher reorder point mean I am carrying too much stock?
Not by itself. A high reorder point can simply reflect fast-moving stock or a long lead time, both of which genuinely require more inventory in the pipeline. It becomes a concern only if the safety stock component looks larger than the demand variability actually justifies.
Should reorder point be calculated per item or per warehouse?
Per item, since usage rate and often lead time differ by product. A single warehouse typically holds many different reorder points, one for each stock-keeping unit it manages.
For a way to size the safety stock figure used here from actual demand variability, see the safety stock calculator.