Reorder Point
When to reorder based on demand & lead time.
These tools are provided for educational and operational guidance only. Results are estimates and may not reflect all factors in your business. Always review calculations and use your own professional judgement before making decisions.
What is this tool?
The Reorder Point calculator tells you how much stock you should have on hand when you place the next order. In this simple version, the reorder point is based on average demand during lead time, so you always have enough units to cover the days between placing an order and receiving it.
Formula
This calculator uses the basic formula:
Reorder point = average daily demand × lead time (days)
- Average daily demand = expected units sold or used per day.
- Lead time (days) = time between placing an order and receiving stock.
Many companies add safety stock on top of this value to protect against variability. You can combine this calculator with the Safety Stock tool to build a richer policy.
Example
Suppose you sell on average 100 units per day and your supplier lead time is 7 days.
Reorder point = 100 × 7 = 700 units.
Practically, this means that when on-hand stock drops to around 700 units you should place a new order. If you also hold safety stock, you would set the trigger even higher to keep your service level.
When should you use this tool?
- When you want a simple rule for “when to reorder” based on demand and lead time.
- When you are defining min/max or reorder policies for key SKUs.
- When suppliers have relatively stable lead times and you can estimate daily demand.
- When you are introducing basic inventory control in a warehouse or store.
- When you want to align planners, buyers, and managers around the same trigger point.
How this tool helps your business
- Reduces stockouts by ensuring you reorder before you run out.
- Limits over-ordering by tying reorder decisions to demand instead of fear or intuition.
- Makes lead-time assumptions explicit and easy to update when suppliers change performance.
- Supports smoother operations and fewer emergency orders or expedited shipments.
Related tools
- Lead Time Demand Calculator – estimate demand during lead time using the same inputs as this tool.
- Safety Stock Calculator – add a buffer on top of your reorder point to hit service-level targets.
- EOQ Calculator – decide how much to order each time you hit the reorder point.
- Fill Rate Calculator – measure how well your reorder rules protect customer service.
Frequently Asked Questions
Should I include safety stock in the reorder point?
Yes. In most policies the reorder point equals lead time demand plus safety stock. This tool gives you the lead time demand component; combine it with a safety stock calculation for a full rule.
What if lead time is not always the same?
Use the typical or contractual lead time in this calculator and account for variability in your safety stock rather than in the reorder point itself.
How often should I update the inputs?
Revisit average demand and lead time whenever demand patterns shift or suppliers change performance, for example after season changes or sourcing changes.
Can I apply the same rule to all SKUs?
The formula is the same, but high-value or critical SKUs usually justify more conservative inputs and higher safety stock than low-value items.