Reorder Point Calculator
Calculate when to place a new purchase order so you never run out of stock — accounting for lead time and safety stock.
What is a Reorder Point?
The reorder point (ROP) is the inventory level at which you should place a new purchase order to replenish stock before it runs out. It accounts for the time it takes your supplier to deliver (lead time) and a buffer for demand variability (safety stock).
Formula
Reorder Point = (Daily Demand × Lead Time) + Safety Stock
How to Determine Safety Stock
Safety stock is your buffer against uncertainty — both in demand and in supplier lead times. A common approach is:
Basic safety stock formula
Safety Stock = (Max Daily Demand × Max Lead Time) − (Avg Daily Demand × Avg Lead Time)
Example
Suppose you sell 50 units per day, your supplier takes 7 days to deliver, and you want 100 units of safety stock:
- Lead Time Demand = 50 × 7 = 350 units
- Safety Stock = 100 units
- Reorder Point = 350 + 100 = 450 units
When your on-hand inventory drops to 450 units, it is time to place a new PO.
Common Mistakes
- Using average lead time without accounting for variability — suppliers are late more often than you think
- Setting one reorder point for all SKUs — fast movers and slow movers need different parameters
- Ignoring seasonality — your daily demand in Q4 may be 3× your Q1 demand
- Not reviewing reorder points regularly — demand patterns shift, suppliers change, and your safety stock needs to adapt
Automate reorder points per SKU
Loumia sets per-SKU, per-warehouse reorder points with seasonality adjustments — and auto-generates suggested POs when stock hits the threshold.
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