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.
Worked scenario
Use average daily demand, observed replenishment lead time and a reviewed safety-stock allowance for one SKU. If demand is 20 units per day, normal lead time is 18 days and safety stock is 140 units, the reorder point reflects both expected lead-time demand and uncertainty. Compare it with inventory position, not only shelf stock.
How to interpret the result
Inventory position normally equals on-hand plus confirmed inbound minus committed demand. A reorder point answers when to review or order; it does not determine purchase quantity. Supplier minimums, case packs, seasonality, promotions, cash and warehouse limits belong in the quantity decision.
Input reference
- Average units sold per day
- Example default: 12
- Total lead time in days
- Example default: 35
- Safety stock days
- Example default: 14
- Days until next order review
- Example default: 14
- Sellable stock on hand
- Example default: 400
- Confirmed inbound stock
- Example default: 100
Common mistakes
- Using transit time instead of full order-to-available lead time.
- Ignoring stockout days that suppressed historical demand.
- Triggering from on-hand stock while confirmed inbound exists.
Before using the result
- Review demand and lead time using the same unit and period.
- Include committed orders in inventory position.
- Recalculate after supplier, route or promotion changes.
Questions to check before deciding
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.
Independent calculator. Not affiliated with or endorsed by the platforms mentioned.