Reorder point calculator

Reorder point formula

Reorder point = average demand per day × lead time (days) + safety stock

The first part is the stock you expect to sell while you wait for the delivery. The safety stock covers the cycles where demand runs higher than average or the supplier is late. Without a buffer, you would run out in roughly half of all cycles.

If you only check stock and order on a fixed schedule, every N days, the order has to last until the next review as well as through the lead time. Protect the lead time plus the review period:

Reorder level = average demand × (lead time + review period) + safety stock

Worked example

A SKU sells 40 units a day, the supplier delivers in 14 days, and you hold 211 units of safety stock (the result of the safety stock example):

40 × 14 + 211 = 771 units

When stock on hand plus open orders drops to 771 units, place the next order. If you only order on Mondays (a 7-day review period), the level rises to 40 × 21 + safety stock, because the order must also cover the week until your next chance to order.

Use inventory position, not shelf stock

Compare the reorder point with your inventory position: stock on hand plus quantities already on order, minus backorders. If you compare with shelf stock alone, the SKU still looks low the day after you ordered and you order it again.

Reorder point says when, not how much

The reorder point only triggers the order. The quantity comes from a separate decision: the economic order quantity, a fixed number of weeks of cover, or the supplier's minimum order and pack size.

When a fixed reorder point stops working

A reorder point built from average demand assumes tomorrow looks like the past few months. For seasonal products, launches, and trending items, it reacts late: it is too low as a peak season ramps up and too high as it ends, which is how you end up out of stock in the peak and overstocked after it.

Time-phased planning fixes this by using the forecast for the months the lead time actually covers instead of a flat average. That is how the Varox Delivery Planner works: it walks each SKU's projected stock forward month by month against the forecast and plans a delivery when the balance would fall below next month's demand plus the safety buffer.

Questions

What is the reorder point formula?

Reorder point = average demand per day × lead time in days + safety stock. Without a safety buffer it is simply the demand you expect during the lead time.

Does the reorder point include safety stock?

Usually yes. Expected demand during the lead time covers an average cycle; the safety stock covers the cycles where demand is higher or the delivery is late.

How do I calculate the reorder point with monthly sales data?

Convert the lead time to months. A 14-day lead time is about 0.46 months, so a SKU selling 1,200 units a month needs 1,200 × 0.46 ≈ 552 units plus safety stock. Set the demand period to month and the calculator does the conversion.

What is the difference between reorder point and reorder quantity?

The reorder point tells you when to order; the reorder quantity tells you how much. A common starting point for the quantity is the economic order quantity, adjusted for minimum order quantities and pack sizes.

Should I compare the reorder point with stock on hand?

Compare it with the inventory position: stock on hand plus open purchase orders, minus backorders. Comparing with shelf stock alone triggers duplicate orders while a delivery is on its way.