Method and assumptions
A practical reorder point covers expected demand during lead time plus a safety window. Use a recent, representative sales period and include production, transit and receiving time.
Reorder point = daily unit sales × (lead time + safety days). Suggested order = target coverage demand - on-hand stock - inbound stock.
Common questions
Should inbound inventory count as available?
Count only confirmed inbound units likely to arrive before stockout. Delayed or unconfirmed orders should be risk-adjusted.
How should seasonal products be handled?
Replace historical daily sales with a forecast for the lead-time window. A single trailing average can understate a seasonal peak.
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