Find the inventory level that should trigger a new order, from daily demand, lead time, and safety stock.
Calculator verified • Last updated: August 2026
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A reorder point is the inventory level that should trigger placing a new order — set so the replacement stock has a chance to arrive before existing inventory runs out. It's built from two pieces: the demand you expect to sell through while waiting for the new order to arrive, plus a safety stock buffer for demand or lead time that runs higher than average:
$$\text{Reorder Point} = (\text{Daily Demand} \times \text{Lead Time}) + \text{Safety Stock}$$
Daily Demand: the average number of units sold or consumed per day.
Lead Time: how many days it takes from placing an order to receiving it.
Safety Stock: an extra buffer of units held to protect against demand spikes or supplier delays beyond the average.
A product that sells an average of 50 units per day, with a supplier lead time of 7 days and a safety stock of 100 units: demand during lead time equals 50 times 7, or 350 units. Adding the 100-unit safety stock buffer gives a reorder point of 450 units. When on-hand inventory drops to 450 units, it's time to place a new order.
Using an average lead time without any safety stock is a frequent one — if a single shipment runs even a few days late, or demand ticks up during that window, stock can run out before the new order arrives. Another is letting lead time drift out of date: a supplier's actual lead time can change over a season or as order volumes shift, and a reorder point calculated from an old lead time understates how much buffer is really needed. Finally, demand itself often isn't flat — a product with seasonal or promotional spikes needs its daily demand figure revisited periodically, not set once and forgotten.
Reorder Point — the inventory level at which a new purchase order should be placed.
Lead Time — the time between placing an order with a supplier and receiving the goods.
Safety Stock — a buffer of extra inventory held to absorb demand or lead-time variability beyond the average.
Stockout — running out of inventory before a new order arrives, resulting in lost sales or delayed fulfillment.
A reorder point is the inventory level at which a new order should be placed, calculated so the replacement stock arrives before you run out. It equals expected demand during the supplier's lead time, plus a safety stock buffer for uncertainty.
Reorder point equals average daily demand multiplied by lead time in days, plus safety stock. The first part covers demand while waiting for a new order to arrive; safety stock covers unexpected spikes in demand or delays in the lead time.
Too little safety stock raises the risk of a stockout if demand spikes or a supplier's lead time runs long, since there's no buffer to absorb the variation. Too much safety stock ties up cash and storage space in inventory that sits unused most of the time — the right amount balances both risks against your specific demand variability and service-level goals.