Reorder Point Calculator

The Reorder Point Calculator tells you when to place your next order so a fresh shipment lands just before you run out of stock. It combines the demand you expect during the supplier's lead time with a safety stock buffer that absorbs demand spikes and delivery delays. You can enter safety stock directly, or let the tool derive it statistically from your demand and lead-time variability and a target service level — then see the answer drawn on an inventory timing diagram and a demand bell curve.

What is a Reorder Point?

A reorder point (ROP) is the inventory level that triggers a new purchase order. While the Economic Order Quantity (EOQ) answers how much to order, the reorder point answers when. Set it too low and you risk a stockout before the next delivery arrives; set it too high and you tie up cash and warehouse space carrying inventory you do not yet need. The reorder point is the level at which the stock still on your shelves is exactly enough to cover sales until the replenishment arrives, plus a safety buffer.

Reorder Point Formula

The basic reorder point adds expected demand during the lead time to your safety stock:

where d is average daily demand, L is the average lead time in days, and SS is safety stock. The first term, d × L, is the lead time demand — what you expect to sell while waiting for the order.

Safety Stock and Service Level

If demand and lead time were perfectly steady, you would need no safety stock at all. In reality both vary, so a buffer protects you against the bad cases. The most common statistical method ties safety stock to a target service level — the probability of not stocking out during a cycle:

Here Z is the z-score of the normal distribution for your service level, σ_d is the standard deviation of daily demand, and σ_L is the standard deviation of the lead time. The term σ_dL is the standard deviation of demand during the lead time, accounting for variability in both demand and lead time. If only demand varies, the formula simplifies to SS = Z × σ_d × √L.

Service Level Z-Scores

Higher service levels demand exponentially more safety stock because the z-score rises steeply in the tail of the normal distribution:

Worked Example

Suppose you sell an average of 40 units a day, your supplier's lead time averages 7 days, daily demand has a standard deviation of 12 units, and you want a 95% service level (assume lead time is steady). Then:

So you place a new order the moment stock falls to about 332 units.

What Affects Your Reorder Point?

Assumptions and Limitations

The statistical method assumes demand during the lead time is roughly normally distributed and that your demand and lead-time standard deviations are reasonable estimates. Real demand can be lumpy, seasonal, or driven by promotions, so review your reorder points regularly and recompute them when demand, lead times, or supplier reliability change. Treat the result as a well-grounded starting point, not a permanent setting.

How to Use This Calculator

1. Enter average daily demand: The number of units you sell or use on a typical day.
2. Enter the lead time: The average number of days between placing an order and receiving it.
3. Choose a safety stock method: Enter a buffer directly, or switch to service-level mode and provide your demand standard deviation, optional lead-time standard deviation, and a target service level.
4. Click Calculate: Review your reorder point, safety stock, days of cover, and stockout risk.
5. Read the diagrams: The timing diagram shows when to order; the bell curve shows your in-stock probability versus stockout risk; the trade-off table shows the cost of higher service levels.

Frequently Asked Questions

What is a reorder point?

A reorder point (ROP) is the inventory level at which you should place a new order so that fresh stock arrives just before you run out. It equals the demand you expect during the supplier's lead time plus a safety stock buffer that protects you against demand spikes and supply delays.

What is the reorder point formula?

The reorder point equals average daily demand multiplied by the lead time in days, plus safety stock. In symbols, ROP = (d × L) + SS, where d is average daily demand, L is the average lead time in days, and SS is safety stock.

How do I calculate safety stock?

A common statistical method sets safety stock to Z × σ_dL, where Z is the z-score for your target service level and σ_dL is the standard deviation of demand during the lead time. With variability in both demand and lead time, σ_dL = √(L × σ_d² + d² × σ_L²).

What is a service level in inventory?

A service level is the probability of not running out of stock during a replenishment cycle. A 95% service level means you expect to have stock available 95% of the time and face a stockout in about 5% of cycles. Higher service levels require exponentially more safety stock.

Does the reorder point depend on order quantity?

No. The reorder point tells you when to order and depends on demand, lead time, and safety stock. The order quantity, often the Economic Order Quantity (EOQ), tells you how much to order. The two are calculated separately and used together.

Why does a higher service level cost so much more safety stock?

Safety stock grows with the z-score of the normal distribution, which rises steeply in the tail. Moving from a 95% to a 99% service level raises the z-score from about 1.65 to 2.33, and reaching 99.9% needs about 3.09. Each extra fraction of a percent of protection costs progressively more inventory.

Additional Resources

• Reorder Point - Wikipedia
• Safety Stock - Wikipedia