GUIDE
How to calculate a reorder point.
A reorder point is the inventory position at which replenishment should be triggered so stock arrives before expected demand consumes the available buffer.
Reorder point formula
Reorder point = average daily demand × lead time + safety stock.
Example: 10 units/day × 14 days + 25 units of safety stock = 165 units.
What changes the answer?
Demand growth, supplier delays, seasonality and demand variability can all change the appropriate reorder point. A static value should be reviewed when these inputs move.
Reorder point vs order quantity
The reorder point answers when to reorder. The recommended order quantity answers how much to replenish. They are related but not interchangeable.