Reorder point = (average daily sales × lead time in days) + safety stock. Sell 5 a day, wait 7 days for delivery, keep 2 days of buffer, and you reorder at 45 units. Set it too low and you run out; set it too high and cash sits on the shelf.
A flat rule like "reorder everything when it gets to 10" is how most small shops start — and it's why the same shop is often out of its best seller while overstocked on items that barely move. A reorder point that's calculated per item fixes both problems with a few minutes of arithmetic.
The basic formula
Reorder point = (average daily sales × lead time in days) + safety stock. The first part covers what you'll sell while waiting for the delivery. Safety stock covers the days when demand is higher or the delivery is late.
Worked examples
| Item | Avg daily sales | Lead time | Safety stock | Reorder point |
|---|---|---|---|---|
| Fast mover (cooking oil, 1 L) | 12 | 5 days | 3 days = 36 | (12 × 5) + 36 = 96 |
| Steady seller (notebooks) | 5 | 7 days | 2 days = 10 | (5 × 7) + 10 = 45 |
| Slow mover (specialty spice) | 0.5 | 3 days | 4 units | (0.5 × 3) + 4 ≈ 6 |
| Imported item (long lead time) | 2 | 30 days | 10 days = 20 | (2 × 30) + 20 = 80 |
A flat "reorder at 10" rule would leave the cooking oil and the imported item regularly out of stock, and the spice sitting at nearly double what it needs.
How to size safety stock
A simple, practical method: safety stock = (maximum daily sales × maximum lead time) − (average daily sales × average lead time). If you normally sell 5 a day with a 7-day lead time, but on a bad week sell 8 a day and wait 10 days, safety stock = (8 × 10) − (5 × 7) = 45 units. That's a deliberately cautious buffer — use it for items where running out loses a customer, and a smaller buffer (a day or two of sales) for items where it doesn't.
Why a flat number per item is risky
Different items sell at very different rates and have very different lead times. A fast-moving item with a long lead time needs a much higher reorder point than a slow-moving item with next-day delivery — using the same number for both means one is overstocked and the other is at real risk of running out.
Accounting for lead time variability
If a supplier's delivery time varies — sometimes 5 days, sometimes 10 — your safety stock needs to cover the worse case, not just the average. This is where a lot of manual reorder-point maths falls short: it's calculated once, from an optimistic lead time, and never revisited when a supplier starts running late. Track the actual delivery days on your last few orders and use those, not the supplier's promise.
Revisiting reorder points
Sales velocity changes — seasonally, with promotions, or as a product's popularity shifts. A reorder point calculated a year ago is a guess, not a plan. Recalculate at least quarterly, and before any known seasonal peak. Our demand forecasting guide shows how to estimate the daily sales figure, and ABC/XYZ analysis helps decide which items deserve the closest attention.
StashBill's inventory intelligence flags items as they drop below their reorder point, calculated from recent sell-through and the lead time you set for each item.
Frequently asked
What if I don't know my exact lead time?
Use your worst realistic case, not your average — a reorder point sized for the average lead time will occasionally run out when a delivery is late.
Should every item have a reorder point?
It's most useful for items where running out costs you a sale. Very low-value or rarely purchased items may not need the same rigour — see ABC/XYZ analysis.
What's the difference between a reorder point and safety stock?
Safety stock is the buffer you never plan to use; the reorder point is the stock level that triggers a new order, and it includes the safety stock plus the stock you'll sell while waiting for delivery.
How much should I order once I hit the reorder point?
Enough to cover demand until the next order cycle — for example, average daily sales × days between orders — balanced against supplier minimums and the cost of holding extra stock.