Reorder Point Calculator Formula
Understand the math behind the reorder point calculator. Each variable explained with a worked example.
Formulas Used
Reorder Point
reorder_point = (daily_demand * lead_time_days) + safety_stockLead Time Demand
lead_time_demand = daily_demand * lead_time_daysVariables
| Variable | Description | Default |
|---|---|---|
daily_demand | Average Daily Demand (units) | 40 |
lead_time_days | Lead Time (days) | 7 |
safety_stock | Safety Stock (units) | 50 |
How It Works
How to Calculate the Reorder Point
Formula
Reorder Point = (Daily Demand x Lead Time) + Safety Stock
The reorder point tells you exactly when to trigger a new purchase order. When inventory drops to this level, it is time to order. The lead time demand component covers expected usage during the wait for delivery. Safety stock provides a buffer against demand spikes or supplier delays. Setting the right reorder point prevents both stockouts and excess inventory.
Worked Example
A product sells 40 units per day, the supplier takes 7 days to deliver, and you maintain 50 units of safety stock.
daily_demand = 40lead_time_days = 7safety_stock = 50
- 01Lead Time Demand = 40 x 7 = 280 units
- 02Reorder Point = 280 + 50 = 330 units
- 03Place a new order when inventory hits 330 units.
Ready to run the numbers?
Open Reorder Point Calculator