Reorder Point Calculator
Calculate the optimal reorder point for your inventory. Determine when to place new orders based on average daily sales, supplier lead time, and safety stock levels to prevent stockouts and optimize inventory turnover.
Use the Safety Stock Calculator to determine an appropriate buffer
Frequently Asked Questions
How the Reorder Point Calculator Works
This calculator determines the inventory level at which you should place a new order. It accounts for the time it takes for a shipment to arrive from your supplier (lead time) plus a safety buffer to handle unexpected demand spikes or supply delays.
Worked Example
Suppose your business sells 100 units per day on average, with a 7-day supplier lead time and a safety stock of 150 units:
- Reorder Point = (100 units/day × 7 days) + 150 units = 850 units
- When inventory falls to 850 units, place a new order to ensure stock arrives before inventory is depleted.
The 150-unit safety stock provides a buffer. If demand increases or the shipment is delayed, you still have stock to fulfill orders.
When to Use This Calculator
- Retail Management: Determine reorder levels for each product to prevent shelf stockouts during peak selling periods.
- E-commerce Operations: Ensure adequate inventory for fulfillment while minimizing excess stock that ties up capital.
- Manufacturing: Calculate reorder points for raw materials to support production schedules without delays.
- Supply Chain Optimization: Balance inventory carrying costs against stockout risks for each SKU.
- Supplier Management: Align reorder timing with supplier lead times and bulk order discounts.
Common Mistakes to Avoid
- Ignoring Lead Time Variability: Suppliers do not always deliver on time. Include safety stock to account for delays.
- Using Peak Demand Instead of Average: The reorder point should be based on average daily sales, not peak days. Adjust safety stock for demand variability instead.
- Not Adjusting for Seasonality: Reorder points should be higher during peak seasons and lower during slow periods.
- Forgetting to Update Lead Times: If you change suppliers or receive shipments more or less frequently, recalculate your reorder point.
- Holding Excessive Safety Stock: High safety stock levels increase carrying costs. Use the Safety Stock Calculator to find an optimal balance.
Responsible Inventory Reordering
While lower reorder points can reduce inventory holding costs, they increase the risk of stockouts and lost sales. Similarly, very high reorder points ensure product availability but tie up cash in inventory. Use this calculator in conjunction with the Safety Stock and Economic Order Quantity calculators to find the optimal balance for your business.