How to use the reorder point calculator
- 1Enter your average daily sales in units for the product. Use recent weeks, not last year, if demand has changed.
- 2Enter the average lead time: the days between placing an order and having the stock ready to sell.
- 3Choose whether to type in your own safety stock or calculate it from your maximum daily sales and longest lead time.
- 4Optionally enter the units you have on hand now to see how many days you have before you need to reorder.
- 5Set a stock alert at the reorder point in your inventory system or spreadsheet.
How the reorder point works
The reorder point is the stock level that should trigger a new purchase order. It covers the units you expect to sell while you wait for the delivery, plus a buffer in case sales run high or the delivery runs late.
Lead time should include every day of the wait: the supplier making or picking the order, shipping, customs if you import, and the time to receive and shelve the stock.
Lead time demand = Average daily sales × Average lead time Reorder point = Lead time demand + Safety stock
Calculating safety stock
Safety stock is the extra stock you hold so a busy week or a late shipment does not leave you empty. This calculator uses the max-minus-average method: plan for your highest daily sales during your longest lead time, and subtract what you normally sell over a normal lead time.
This method is simple and uses numbers most sellers already know. It can be cautious if your worst day and your worst delivery rarely happen together. Businesses with steady sales data sometimes use a statistical method based on standard deviation and a target service level instead.
Safety stock = (Max daily sales × Max lead time) − (Average daily sales × Average lead time)
Days of cover
Days of cover tells you how long a stock level lasts at your average sales rate. At the reorder point, it should be longer than your average lead time, and the difference is the cushion your safety stock gives you.
For marketplaces like Amazon FBA, add the time it takes the warehouse to receive and check in stock, which can add days or weeks at busy times of year.
Days of cover = Stock level ÷ Average daily sales
Worked example
An online shop sells on average 40 phone cases a day, up to 55 on its busiest days. Its supplier usually delivers in 10 days, but has taken as long as 13.
| Average daily sales | 40 units |
| Average lead time | 10 days |
| Lead time demand | 400 units |
| Safety stock (55 × 13 − 40 × 10) | 315 units |
| Reorder point | 715 units |
| Days of cover at the reorder point | 17.9 days |
The shop should place a new order when stock falls to 715 cases. At normal sales that stock lasts about 18 days, giving almost 8 days of cushion beyond the usual 10-day wait.