Reorder Point Calculator
When to reorder stock: the reorder point from average daily demand, lead time and safety stock, with safety stock from your service level and the variability of demand and lead time, and an optional economic order quantity.
Result…
How it's calculated
Reorder point = average daily demand × lead time + safety stock Safety stock (demand varies) = z × σd × √L Safety stock (demand and lead time vary) = z × √(L × σd² + d² × σL²) z = normal inverse of the service level EOQ = √(2 × yearly demand × cost per order ÷ holding cost per unit a year)
The reorder point is the stock level at which you place the next order, so that new stock arrives before you run out. It covers the demand you expect while you wait for the order (average daily demand times the lead time) plus safety stock for days when sales run above average or the delivery is late. Safety stock grows with the service level you choose, through the z-score from the normal distribution: a 95% cycle service level means a 5% chance of a stock-out in each order cycle. When both demand and lead time vary, the combined formula adds both sources of uncertainty. Optionally, the page also works out the economic order quantity, the order size that balances ordering and holding costs.
Your numbers, step by step
About the Reorder Point calculator
This reorder point calculator tells you the stock level at which to place your next order, so new stock arrives before you sell out. It adds the demand you expect during the lead time to a safety stock that covers busy days and late deliveries. The safety stock comes from the service level you choose, through a z-score from the normal distribution, and from how much daily demand varies; if your supplier's lead time also varies, the combined formula includes that too. If you already know your safety stock, enter it directly. Shop owners, ecommerce sellers and warehouse planners can also work out the economic order quantity (EOQ), the order size that balances ordering and holding costs. Each step is shown with your numbers, in units, so it works the same for any product and any currency. To see how fast stock sells through, try the inventory turnover calculator.
How to use it
- Choose how to set the “Safety stock”: “Demand varies”, “Demand and lead time vary” or “I know it”.
- Enter the “Average daily demand” and the “Average lead time” in days.
- Enter the “Standard deviation of daily demand”, the “Standard deviation of lead time” if it varies, and your “Service level”.
- Optionally turn on “Economic order quantity” and enter the “Yearly demand”, “Cost per order” and “Holding cost per unit a year”.
Worked example
A product sells 40 units a day with a standard deviation of 8, and the lead time averages 7 days with a standard deviation of 1.5 days. Demand during the lead time is 40 × 7 = 280 units. At a 95% service level, z = 1.6449, and the spread of demand over the lead time is √(7 × 8² + 40² × 1.5²) = 63.62 units, so the safety stock is 1.6449 × 63.62 = 104.65 units. The reorder point is 280 + 104.65 = 384.65: reorder when stock falls to 385 units. With yearly demand of 14,600, a cost per order of 50 and a holding cost of 2 per unit a year, the EOQ is 854.40 units, about 17 orders a year.
Updated
Questions people ask
How do I calculate a reorder point?
Multiply average daily demand by the lead time in days, then add safety stock. With 40 units a day, a 7-day lead time and 50 units of safety stock, the reorder point is 280 + 50 = 330 units.
What is the safety stock formula?
When only demand varies, safety stock = z × σd × √L. When demand and lead time both vary, safety stock = z × √(L × σd² + d² × σL²). Both are set out in the safety stock article on Wikipedia.
What z-score goes with a 95% service level?
About 1.645, the point of the standard normal distribution with 95% of values below it. A 99% service level needs about 2.326, so safety stock rises quickly as you approach 100%.
What is a common mistake with reorder points?
Mixing time units, such as a lead time in weeks with demand per day, or using the standard deviation of weekly sales as if it were daily. Put everything in days first.
When are these formulas not enough?
They assume steady, roughly normal demand. Seasonal peaks, promotions, slow sellers with lumpy demand, minimum order quantities and perishable stock need adjusted methods or planning software, and an operations specialist can help set them up.