The short answer: your reorder point is the stock level at which you should place a new order. The formula is: (average daily sales × lead time in days) + safety stock. Hit that level, and you reorder — arriving stock lands just as you’re running low, without a costly stockout or an overstuffed shelf.
The formula, explained
- Average daily sales — how many units of the item you sell per day.
- Lead time — how many days it takes for a new order to arrive.
- Safety stock — a small buffer for busy days or late deliveries.
A worked example
Say you sell 8 units of a product a day, your supplier takes 5 days to deliver, and you keep 10 units as a buffer. Your reorder point is (8 × 5) + 10 = 50 units. When stock drops to 50, you place the order; by the time it arrives, you’ve sold about 40 and still have your 10-unit buffer.
Why a reorder point beats “ordering when it looks low”
Eyeballing shelves fails in two directions: you forget fast movers until they’re gone (lost sales, disappointed customers) and you over-order slow movers into dead stock. A reorder point per product replaces guesswork with a number.
Set safety stock sensibly
More buffer means fewer stockouts but more cash tied up. Give your best-sellers and long-lead-time items a bigger buffer; keep it lean on slow, easily-restocked items. Review the numbers as sales patterns change.
Let the system watch it for you
Calculating this by hand for every product is impractical. RushFlow tracks stock in real time and alerts you when items hit their reorder level, so you buy at the right moment without checking shelves. Try the live demo.
Related: inventory management for a small shop.