What is a reorder point and why does it matter?

A reorder point (ROP) is the inventory level at which you should place a new order with your supplier. It matters because ordering too late causes stockouts (lost sales, unhappy customers), while ordering too early ties up cash in excess inventory. The right reorder point balances these risks.

What is the reorder point formula?

The standard reorder point formula is: Reorder Point = (Average Daily Unit Sales × Lead Time in Days) + Safety Stock. For example, if you sell 50 units per day, your supplier takes 7 days to deliver, and you keep 100 units as safety stock, your reorder point is (50 × 7) + 100 = 450 units.

How do I calculate safety stock for my reorder point?

Safety stock protects against uncertainty in demand and supply. A common formula is: Safety Stock = (Maximum Daily Sales × Maximum Lead Time) - (Average Daily Sales × Average Lead Time). Our calculator handles this automatically based on your inputs.

What's the difference between reorder point and reorder level?

Reorder point and reorder level are the same concept—different industries use different terminology. Manufacturing and logistics often say 'reorder level,' while retail and e-commerce typically use 'reorder point.' Both refer to the inventory threshold that triggers a new purchase order.

How does lead time affect my reorder point?

Lead time directly impacts your reorder point—longer lead times require higher reorder points. If your supplier takes 14 days instead of 7 days, you need to order earlier (at higher inventory levels) to avoid stockouts.

Should I use the same reorder point for all products?

No. Each SKU should have its own reorder point based on its unique demand pattern, lead time, and criticality. High-velocity items need more frequent monitoring. Critical items warrant higher safety stock. Use ABC analysis to prioritize.

How often should I recalculate my reorder points?

Review reorder points quarterly at minimum, or monthly for fast-moving inventory. Recalculate immediately when demand patterns change significantly, you switch suppliers, lead times shift, or you enter peak/slow seasons.

What's the relationship between reorder point and economic order quantity (EOQ)?

Reorder point tells you WHEN to order; EOQ tells you HOW MUCH to order. They work together: when inventory hits your reorder point, you order your EOQ amount. Together, they minimize total inventory costs.

Reorder Point Calculator

Calculate your optimal reorder point with safety stock. Free calculator + industry benchmarks. Prevent stockouts & reduce carrying costs.

Enter Your Values

Average Daily Unit Sales*

units/day

Your typical daily sales volume for this product. Use last 30-90 days of data.

Lead Time (Days)*

days

Days from placing order to receiving inventory. Include shipping and receiving time.

Maximum Daily Sales

units/day

Highest daily sales in your reference period. Used to calculate safety stock.

Maximum Lead Time (Days)

days

Longest supplier lead time experienced. Accounts for delays.

Unit Cost

Cost per unit. Used to calculate inventory investment at reorder point.

Annual Carrying Cost

Cost to hold inventory (storage, insurance, obsolescence). Typically 20-30%.

Formula

Reorder Point = (Average Daily Sales × Lead Time) + Safety Stock

The reorder point ensures you have enough inventory to cover demand during the lead time plus a safety buffer. When your inventory level drops to this number, place a new order.

Reorder Point (Units)750

Reorder at 750 units — Conservative buffer (15.0 days of supply).

Lead Time Demand350

Recommended Safety Stock400

Days of Supply at ROP15.0 days

Conservative ROP (99%)950

Aggressive ROP (90%)590

Inventory Value at ROP$18,750

Annual Safety Stock Cost$2,500

Estimated Stockout RiskLow (<5%)

Reorder Point & Safety Stock Benchmarks

Conservative2x+ lead time coverage — Maximum protection, higher carrying costs

> 2

Balanced1.5-2x lead time coverage — Good balance of cost and risk

1.5 – 2

Standard1.2-1.5x lead time coverage — Industry standard approach

1.2 – 1.5

Lean1-1.2x lead time coverage — Minimal buffer, higher stockout risk

1 – 1.2

RiskyBelow lead time demand — High stockout probability

< 1

Source: Supply Chain Management Best Practices

How to Calculate Reorder Point

Enter your average daily unit sales (use last 30-90 days of data)
Enter your supplier lead time in days (order to receipt)
Optionally enter maximum daily sales for safety stock calculation
Optionally enter maximum lead time for variability protection
Enter unit cost and carrying cost for investment analysis
Review your reorder point, safety stock, and scenario comparisons

Reorder Point & Safety Stock Benchmarks

20-30% of lead time demand

Safety Stock (Stable Demand)

50%+ of lead time demand

Safety Stock (Variable Demand)

95-99%

Target Service Level (A-items)

3-7 days

E-commerce Lead Time (Domestic)

14-30 days

E-commerce Lead Time (International)

20-30% of inventory value

Annual Carrying Cost

Monthly (A-items), Quarterly (B/C)

Reorder Point Review Frequency

Source: Supply Chain Management Best Practices

Reorder Point Calculator

Reorder Point & Safety Stock Benchmarks

How to Calculate Reorder Point

Reorder Point & Safety Stock Benchmarks

Frequently Asked Questions

What is a reorder point and why does it matter?

What is the reorder point formula?

How do I calculate safety stock for my reorder point?

What's the difference between reorder point and reorder level?

How does lead time affect my reorder point?

Should I use the same reorder point for all products?

How often should I recalculate my reorder points?

What's the relationship between reorder point and economic order quantity (EOQ)?