Business
Inventory Reorder Point Calculator
Calculate lead-time demand, safety stock, reorder point, current days of stock, planned order-cycle coverage, and current shortage to the threshold. The inventory-tank visual places on-hand units, the safety-stock floor, and reorder trigger on one scale.
Recommended reorder point-
Expected lead-time demand-
Safety stock allowance-
Current days of stock-
Replenishment cycle coverage-
Units below reorder point-
Decision view
Inventory tank and reorder trigger
Inventory tank and reorder triggerLead-time demand and safety stock build the reorder threshold, which is compared with current on-hand inventory and the planned replenishment.
Exact scenario comparisonSupplier lead time (days) changes while all other entered assumptions remain constant.
| Supplier lead time (days) | Recommended reorder point | Expected lead-time demand | Safety stock allowance | Current days of stock | Replenishment cycle coverage | Units below reorder point |
|---|
How to use Inventory Reorder Point Calculator
- Build daily average and standard deviation from the same representative demand history.
- Use lead time measured on the same calendar or operating-day basis.
- Release and size the replenishment order under supplier, review-cycle, capacity, and cash constraints.
Calculator guide
Understanding Inventory Reorder Point Calculator
A reorder point is the inventory threshold at which a replenishment order should be released: expected demand during supplier lead time plus a statistical safety-stock allowance. It is not the order quantity.
Calculation method
How the calculation works
Estimate lead-time demand and add statistically scaled safety stock based on demand variability and the entered service factor. Multiply average daily demand by lead days, add service factor times daily demand deviation times the square root of lead time, and compare the result with on-hand stock.
Control design
Connect the threshold to the real replenishment policy
A correct threshold still needs an executable order rule.
Worked situations
Practical examples
- 48 units/day for 12 days creates 576 units of expected lead-time demand.
- A 1.65 factor and 9-unit daily deviation add about 51.44 units of safety stock.
- The resulting reorder point is about 627 units, slightly above 620 units currently on hand.
Better inputs
Useful tips
- Separate demand variability from lead-time variability.
- Review service factors by SKU criticality and stockout cost.
- Use inventory position, including open orders and backorders, when that is the operating policy.
Before relying on the result
Limitations and common mistakes
- Safety stock assumes independent stable daily-demand variability and fixed lead time.
- Lead-time variability, seasonality, perishability, substitutions, order review frequency, MOQ, case packs, open orders, and backorders are excluded.
- A service factor is an input, not a guaranteed service level.
Reference
Key terms
- Lead-time demand
- Expected demand between order release and replenishment receipt.
- Safety stock
- Variability allowance added above expected lead-time demand.
- Reorder point
- Inventory threshold for releasing an order.
- Order quantity
- Units planned for replenishment, separate from the trigger.
Important note
Calculated from the entered values using the displayed accounting method. Reconcile material decisions with source records and applicable accounting policy.
Frequently asked questions
Is the reorder point the quantity to buy?
No. It is the trigger; order quantity is a separate decision.
Why does safety stock use square root of lead time?
The model assumes independent daily demand variation whose variance accumulates over time.
Should on-order stock be included?
Use inventory position when the operating policy includes open orders and backorders.
Does a higher z-value guarantee the target service level?
No. It depends on whether the demand and lead-time assumptions fit reality.