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Inventory and ordering
Reorder point calculator: when to order again
Give it your daily usage, the supplier lead time and the safety stock you hold. It returns the stock level at which you should place the next order.
Reorder point equals daily usage times lead time in days, plus safety stock. At the default numbers you reorder when 680 units are left.
Written by Procurement VMS Editorial Team · Reviewed by Michael, Procurement Advisor Expert · Updated
Your numbers
The boxes start with an example so you can see how it works. Replace them with your own figures.
Your result
Place the next order when stock drops to 680 units. By the time the order arrives you will have used about 560 units, which leaves your 120 units of safety stock untouched.
| Demand during lead time | 560 units |
|---|---|
| Reorder point | 680 units |
| Days of stock at the reorder point | 17.0 days |
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How the reorder point calculator works
The formula
Reorder point = (average daily usage x lead time in days) + safety stock.
The reorder point turns a vague habit of ordering when stock looks low into a number. It is the stock level at which the order has to go out, so that the delivery lands before you run dry.
Lead time is the number people get wrong. Count from the day you decide to order, not the day the supplier confirms it. Approval time, supplier processing, transit and receiving all belong in it.
The example numbers are illustrative and are not benchmarks. Use your own data for any decision.
How to use it with your own data
- Measure daily usage over a normal stretch, and leave out one-off bulk orders that would inflate it.
- Use the lead time you actually see, such as the average of the last ten deliveries. The lead time calculator adds up the stages for you.
- Add safety stock from the safety stock calculator so the trigger covers late deliveries.
Mistakes that skew the answer
Using the promised lead time
The supplier quotes the best case. If the last ten deliveries averaged 17 days, calculate with 17, not 14.
Forgetting safety stock
Without it the trigger only works when everything runs on time, which is rare enough that stock-outs follow.
Setting it once and leaving it
Usage and lead time drift. Review the number each quarter or after any change in supplier or season.
What to do with the result
Load the reorder point into your inventory system or a simple min and max sheet, then pair it with the order size from the EOQ calculator. If you buy through a blanket order, use the figure to schedule releases in your blanket purchase order template.
Questions about the reorder point calculator
What is a reorder point?
It is the stock level that triggers a new purchase order, set so that the delivery arrives before stock runs out.
Is reorder point the same as safety stock?
No. Safety stock is the buffer inside the reorder point. The reorder point also covers the demand that happens while you wait for the delivery.
How often should I recalculate it?
Every quarter for stable items, and straight away when usage or supplier lead time changes.
What if lead time varies a lot?
Use the average for the lead time and raise safety stock to cover the swings. The safety stock calculator has a field for lead time variation.