Order too late and you run out, losing sales and customers; order too early and you tie up cash. The reorder point is the number that gets it right — the stock level at which you should place your next order. This guide gives the formula, a worked example, and how to use it.

What is a reorder point?

A reorder point is the inventory level that triggers a new order. When stock for an item falls to this level, you reorder — timed so fresh stock arrives just as you would otherwise run out. Set one per product and you never have to rely on memory.

The reorder point formula

Reorder point = (Average daily sales × Lead time in days) + Safety stock

Lead time is how long the supplier takes to deliver; safety stock is a buffer for demand spikes and delays — see safety stock.

A worked example

Suppose an item sells 8 units a day, your supplier takes 5 days to deliver, and you keep 15 units of safety stock.

  • Demand during lead time = 8 × 5 = 40 units.
  • Reorder point = 40 + 15 = 55 units.

When stock hits 55, you reorder — and new stock arrives before you run dry.

Why safety stock matters

Without a buffer, any spike in demand or supplier delay causes a stockout. Safety stock covers that uncertainty. Set it higher for unpredictable or fast-selling items, lower for steady, reliable ones — and don't overdo it, or you drift into overstocking.

Keep reorder points current

Sales rates and lead times change, so reorder points should be reviewed — a point set on last year's demand can be badly wrong. Watching turnover helps: see inventory turnover ratio.

Automate your reorder points

RushFlow tracks each item's sales rate and stock level and can alert you the moment an item hits its reorder point — across every branch — so you restock on time without watching shelves.