The formula
Reorder Point = (Average Daily Sales × Lead Time in Days) + Safety Stock
The first term is your lead-time demand — how much you’ll sell while waiting for the order to arrive. The second term, safety stock, is the buffer that absorbs the days you sell faster than average or the shipment runs late.
A worked example
You sell an average of 12 units a day, your vendor’s lead time is 10 days, and you hold 30 units of safety stock.
(12 × 10) + 30 = 150 units
When on-hand drops to 150 units, it’s time to place the order. The 120 units cover normal selling during the wait; the 30-unit buffer covers a hot streak or a late truck.
Safety stock, simply
Safety stock exists because neither demand nor lead time is perfectly steady. A common, intuitive way to size it:
Safety Stock = (Max Daily Sales × Max Lead Time) − (Avg Daily Sales × Avg Lead Time)
It sizes the buffer to the gap between a bad day (peak demand, slow delivery) and an average one. More variable demand or less reliable vendors call for more safety stock; steady sellers from dependable suppliers need less. Carrying safety stock isn’t free — it’s a deliberate trade of carrying cost against the cost of a stock-out.
Lead time is the lever you forget
Lead time isn’t just the vendor’s shipping time — it includes your own order-processing and receiving time. Shortening lead time (faster vendors, smaller MOQs, standing orders) lowers both the reorder point and the safety stock you need, which frees cash and lifts turns. It’s often the highest-leverage thing a buyer can negotiate.
Reorder point vs. weeks of supply
Weeks of supply tells you how long current stock will last; the reorder point tells you the exact quantity that should trigger an order. The two connect directly: you reorder when your remaining runway falls to the lead time plus a buffer. And the demand input behind both should reflect real movement — which is what sell-through measures.
A note on order quantity (EOQ)
The reorder point decides when to order; economic order quantity (EOQ) decides how much, balancing ordering costs against carrying costs. In practice, vendor minimums, case packs, and freight breaks usually shape order size more than a textbook EOQ — but the principle (don’t order so little that you’re always reordering, or so much that it sits) still holds.
Reorder points in Vendee Pro
Vendee Pro’s reorder automation lets you set per-SKU reorder rules and uses sell-through and demand signals to propose vendor-grouped draft purchase orders you confirm with one click, while the Weeks-on-Hand report shows how much runway each item has left. You stay in control of every order; the system just makes sure the right ones surface in time. Inventory feature →
Frequently asked questions
What is a reorder point?
The inventory level at which you should place a new order so stock arrives before you run out. It equals the demand you expect during the lead time plus your safety stock.
How do you calculate the reorder point?
Multiply average daily (or weekly) sales by the lead time, then add safety stock. For example, 12 units a day × a 10-day lead time = 120 units, plus 30 units of safety stock = a reorder point of 150 units.
What is safety stock?
Extra inventory held to absorb demand spikes and lead-time delays. A simple approach is (max daily sales × max lead time) − (avg daily sales × avg lead time).
How is the reorder point different from weeks of supply?
Weeks of supply is how long current stock will last; the reorder point is the specific quantity that triggers a new order. You reorder when your remaining stock falls to the reorder point.
Reorder before you run out, not after.
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