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The reorder point is the stock level at which you should place a new order, so the new stock arrives just before you run out. It covers the demand during the supplier's lead time, plus a safety stock for days when sales are higher or deliveries are late.
A simple, widely used safety stock is (maximum daily usage × maximum lead time) − (average daily usage × average lead time). If you already know the safety stock you want, enter it directly.
| Average daily sales / usage (units) | 40 |
| Average lead time (days) | 7 |
| Safety stock | Work it out from maximum usage and lead time |
| Maximum daily usage (units) | 55 |
| Maximum lead time (days) | 10 |
| Safety stock (units) | 100 |
| Reorder point (units) | 550 |
| Lead-time demand (units) | 280 |
| Safety stock (units) | 270 |
| Days of stock at reorder point | 13.75 |
Safety stock 270; reorder at 550 units.
Try this example →| Average daily sales / usage (units) | 40 |
| Average lead time (days) | 7 |
| Safety stock | I know my safety stock |
| Maximum daily usage (units) | 55 |
| Maximum lead time (days) | 10 |
| Safety stock (units) | 100 |
| Reorder point (units) | 380 |
| Lead-time demand (units) | 280 |
| Safety stock (units) | 100 |
| Days of stock at reorder point | 9.5 |
Reorder at 380 units.
Try this example →The inventory level that triggers a new purchase order, so stock arrives before you run out.
Average daily usage × lead time in days + safety stock. 40 units a day × 7 days + 270 safety stock = 550 units.
Extra stock kept to cover demand spikes and late deliveries. A simple formula is maximum usage × maximum lead time − average usage × average lead time.