What this calculator does
The reorder point is the stock level at which you place your next purchase order so replenishment arrives before you run out. This calculator works it out from your daily sales rate, your supplier's lead time and the safety stock you want to hold, then tells you how many days of cover you currently have left.
How to use it
- Enter your average daily sales in units. Use a recent period that reflects current demand.
- Enter the supplier lead time in days — from placing the order to having sellable stock, including customs and inbound handling.
- Enter your safety stock: the buffer you want in case demand spikes or the shipment is late.
- Enter your current stock to see days of cover and how long before you must reorder.
- Place the order when stock reaches the reorder point, not when it starts to look low.
The formula, explained
Lead-time demand is the stock you will sell while you are waiting for the new shipment. Safety stock is what protects you when either the demand or the lead time turns out worse than expected.
A common way to set safety stock is to cover the difference between your normal lead time and your worst observed lead time, multiplied by daily sales. If your supplier usually takes 14 days but has taken 20, that six-day gap at 22 units a day is about 130 units of protection.
A worked example
A store sells 22 units a day, the supplier takes 14 days, and safety stock is set at 120 units. Current stock is 600.
Lead-time demand is 22 × 14 = 308, so the reorder point is 308 + 120 = 428 units. With 600 in stock there are about 27 days of cover, and roughly 8 days before the reorder point is reached. Putting that date in a calendar is more reliable than checking inventory when something feels low.
| Daily sales | 22 |
|---|---|
| Lead time | 14 days |
| Lead-time demand | 308 |
| Safety stock | 120 |
| Reorder point | 428 units |
What a good result looks like
Safety stock is usually expressed as days of cover. What is appropriate depends on how reliable your supplier is.
| Range | What it means |
|---|---|
| 3 to 5 days | Reliable local suppliers with short, consistent lead times. |
| 7 to 14 days | The standard range for overseas suppliers with predictable shipping. |
| 14 to 21 days | Volatile lead times, seasonal peaks or single-supplier dependency. |
| Above 21 days | Expensive in tied-up cash. Consider a second supplier instead. |
Common mistakes
- Using an outdated sales rate. A rate calculated during a promotion will overstate demand; one from a quiet week will understate it. Use a representative recent period.
- Measuring lead time from dispatch. Lead time runs from when you place the order to when stock is sellable, including production, transit, customs and receiving.
- Setting safety stock at zero. Zero buffer means every supplier delay becomes a stockout. Even a few days of cover prevents most of them.
- Ignoring seasonality. Fourth-quarter demand can double while shipping simultaneously slows. Raise both the reorder point and safety stock before the peak, not during it.
- Forgetting minimum order quantities. The reorder point tells you when to order. Your supplier's minimum tells you how much, and the two need to be reconciled in advance.
Frequently asked questions
What is a reorder point?
It is the inventory level that triggers a new purchase order. Set correctly, the replacement stock arrives just as you are working through your safety buffer, so you never run out and never hold more inventory than necessary.
Does reorder point apply to dropshipping?
It applies whenever you hold stock — and many dropshipping stores eventually do for their best sellers, because holding inventory cuts delivery times dramatically. If you are purely supplier-fulfilled, the equivalent question is whether your supplier holds enough stock, which is worth asking directly.
How do I calculate safety stock?
A practical method is to multiply your average daily sales by the difference between your normal and worst-case lead times. If you usually wait 14 days but have waited 20, and you sell 22 units a day, that is roughly 130 units of safety stock.
What happens if I set the reorder point too high?
You tie up cash in inventory that sits on a shelf. That is safer than stocking out but it has a real cost, particularly for a young store where cash flow is the binding constraint. The aim is enough cover to absorb normal variation, not every conceivable delay.
How often should I recalculate?
Monthly for most products, and before any known demand change such as a seasonal peak or a planned campaign. If your daily sales rate has moved by more than about twenty percent, the old reorder point is no longer protecting you.
How this fits with your other numbers
Stockouts are expensive in a way that does not show up in any report. You lose the sales, you lose the campaign momentum, and the ad account has to relearn once you switch spending back on. A reorder point turns replenishment from a judgement call into a date you can put in a calendar.
For stores that are still fully supplier-fulfilled, the same arithmetic applies to your supplier's stock rather than your own. Ask what they hold and what their own lead time is, because a supplier running out is indistinguishable from you running out as far as your customer is concerned — and you will find out about it later than they do.