Reorder Point Calculator
The inventory level that should trigger replenishment.
Reorder point
1,750
- Demand during lead time
- 1,350 units
- Days of cover at reorder point
- 11.7 days
- Safety stock expressed in days
- 2.7 days
The reorder point answers a question that has a hard deadline attached: at what inventory level must I place the next order so it arrives before I run out? Get it too low and you stock out while the order is in transit; get it too high and you carry stock you do not need. The calculation is simple arithmetic — average demand during lead time plus a safety buffer — but it depends entirely on the lead time being the real one.
That last point is where most reorder points fail in practice. The lead time that matters is not the supplier’s quoted lead time, it is the elapsed time from the moment you decide to order to the moment the stock is available to consume — including approval, PO issue, transit, goods-in inspection and put-away. Plants routinely use a 7-day quoted lead time when the true internal cycle is 11 days, and then wonder why they keep running short.
How the result is calculated
Reorder point = (Average daily demand × Lead time) + Safety stock- Demand during lead time = Average daily demand × Total replenishment lead time
- Reorder point = Demand during lead time + Safety stock
- Days of cover = Reorder point ÷ Average daily demand
Variables
| Symbol | Meaning | Unit |
|---|---|---|
ROP | Reorder point | units |
d | Average daily demand | units/day |
L | Total replenishment lead time | days |
SS | Safety stock | units |
Worked example
A line consumes 150 units a day. The full replenishment cycle — approval, PO, transit, goods-in inspection — takes 9 days. The planner has set safety stock at 400 units.
- Demand during lead time = 150 × 9 = 1,350 units
- Reorder point = 1,350 + 400 = 1,750 units
- Days of cover = 1,750 ÷ 150 = 11.7 days
- Safety stock in days = 400 ÷ 150 = 2.7 days
Place the order when on-hand inventory reaches 1,750 units. That gives 9 days of cover for normal demand plus 2.7 days of buffer. If the order is placed by a weekly MRP run rather than daily, add half the review period to the lead time — otherwise the effective lead time is up to 3.5 days longer than assumed.
What this calculation does not cover
- Assumes demand is level. Where demand has a weekly or seasonal pattern, use the demand for the specific lead-time window rather than an annual average divided by 365.
- Lead time must include the internal order cycle, not just supplier transit. Approval queues, consolidation, receiving inspection and put-away routinely add 30–60% to quoted lead times.
- A continuous review assumption. If orders are only reviewed weekly, add half the review period to the lead time — a fixed-interval policy behaves differently from a continuous one.
- Safety stock is an input here, not a result. Calculate it properly first with the safety stock calculator, otherwise this number inherits whatever assumption you made there.
- Does not account for minimum order quantities. If MOQ exceeds the demand during lead time, the order size constraint drives the policy more than the reorder point does.
Frequently asked questions
What happens if I set the reorder point too low?
You stock out during the lead time. The failure is not gradual — the stock hits zero before the replacement arrives and the line stops. Because the consequence is severe and immediate, planners tend to over-correct upwards, which is why excess inventory is more often the symptom of an unreliable lead time than of a generous formula.
Should the reorder point include goods-in inspection time?
Yes. The stock is not available to consume until it has passed inspection and been put away. If incoming inspection takes two days, those two days belong in the lead time. This single omission is one of the most common causes of calculated reorder points that look right on paper and fail in practice.
How does a periodic review system change the calculation?
In a fixed-interval system you only place orders at review points, so the worst case is that demand spikes the day after a review. Add half the review period to the lead time in the formula — for a weekly review, that is 3.5 days. The resulting reorder point will be higher than a continuous-review equivalent, which is the correct compensation.