Reorder point formula: when to restock, with examples
How to calculate the reorder point and safety stock for each product, with worked examples, a service-level table and the mistakes that leave shelves empty.
Clientlly teamUpdated 3 min read
Key takeaways
- Reorder point = average daily usage × lead time in days + safety stock.
- Safety stock covers the days when you sell more than usual or the supplier is late.
- Simple safety stock = (maximum daily usage × maximum lead time) − (average daily usage × average lead time).
- Recalculate reorder points at least every quarter, and for every product whose sales or supplier changed.
On this page
The reorder point is the stock level at which you place a new order, so the goods arrive before you run out. The formula is:
Reorder point = average daily usage × lead time (days) + safety stock
If you sell 4 boxes of toner a day, the supplier needs 7 days to deliver, and you keep 32 boxes as a buffer, you reorder when stock falls to 4 × 7 + 32 = 60 boxes.
The three numbers you need
| Term | Meaning | Where to find it |
|---|---|---|
| Average daily usage | How many units you sell or use per day | Sales of the last 60–90 days ÷ number of days |
| Lead time | Days from placing the order to having the goods on the shelf | Your past purchase orders and deliveries |
| Safety stock | Extra units kept for surprises | Calculated below |
Use working days or calendar days consistently. If the warehouse is closed at weekends, count working days for both usage and lead time.
How to calculate safety stock
Method 1: the simple max–average formula
Safety stock = (maximum daily usage × maximum lead time) − (average daily usage × average lead time)
It needs no statistics and works well for most small businesses.
Example: toner sells 4 boxes on an average day and 6 on a busy day. Delivery usually takes 7 days, but has taken 10.
- Worst case: 6 × 10 = 60
- Normal case: 4 × 7 = 28
- Safety stock = 60 − 28 = 32 boxes
- Reorder point = 28 + 32 = 60 boxes
Method 2: the service-level formula
If you have enough sales history, you can choose how often you accept running out:
Safety stock = Z × standard deviation of daily demand × √lead time
Z depends on the service level, the share of order cycles in which you do not run out:
| Service level | Z |
|---|---|
| 90% | 1.28 |
| 95% | 1.65 |
| 98% | 2.05 |
| 99% | 2.33 |
Example: daily demand varies with a standard deviation of 1.5 boxes, lead time is 9 days, and you want 95%. Safety stock = 1.65 × 1.5 × √9 = 1.65 × 1.5 × 3 ≈ 7.4, so keep 8 boxes.
Worked examples for three products
| Product | Daily usage | Lead time | Safety stock | Reorder point |
|---|---|---|---|---|
| A4 paper (boxes) | 10 | 3 days | 15 | 45 |
| Toner cartridges | 4 | 7 days | 32 | 60 |
| Air conditioner units | 0.5 | 21 days | 4 | 14.5, so 15 |
Products with long lead times need a high reorder point even when they sell slowly.
Reorder point vs. how much to order
The reorder point tells you when to order. How much to order is a separate decision. A common starting point is the economic order quantity (EOQ):
EOQ = √(2 × annual demand × cost per order ÷ annual holding cost per unit)
If you sell 1,000 boxes a year, each order costs €20 to place and receive, and holding one box for a year costs €4, then EOQ = √(2 × 1,000 × 20 ÷ 4) = √10,000 = 100 boxes. Minimum order quantities and supplier discounts often override the formula, but it gives you a sensible baseline.
Common mistakes
- One reorder point for everything. Each product needs its own, based on its own sales and supplier.
- Using last year's numbers forever. Demand and lead times change; recalculate at least quarterly.
- Ignoring seasonality. Raise reorder points before your busy season, not during it.
- Counting stock that is reserved for orders already accepted as available.
- Checking stock by hand. A reorder point only works if someone sees when it is reached.
How Clientlly helps
In Clientlly you set reorder rules per product and warehouse. Stock moves automatically with every sale and purchase, you get a low-stock notification when an item reaches its reorder point, and reorder suggestions show what to buy and how much. See the inventory module.
Frequently asked questions
What is a reorder point?
The stock level at which you place a new order, so the goods arrive before you run out. It equals average daily usage times lead time, plus safety stock.
How much safety stock should I keep?
A simple rule is (maximum daily usage × maximum lead time) − (average daily usage × average lead time). Keep more for products whose absence stops sales, less for everything else.
What is the difference between reorder point and minimum stock?
They are often used as the same thing: the level that triggers a new order. Some businesses also keep a lower minimum that must never be crossed, equal to the safety stock.
How do I find my supplier's lead time?
Compare order dates with delivery dates on your last purchase orders. Use the average for the normal case and the longest one for the worst case.
Keep reading
Inventory
FIFO vs weighted average: inventory valuation with examples
One worked example shows how FIFO, weighted average and LIFO split the same purchases into cost of goods sold and closing stock, and what IAS 2 says belongs in inventory cost.
9 min read
Read the articleAccounting & cash
Month-end close checklist: steps, timeline and examples
The steps that make one month's books complete and correct: a checklist with owners and days, a five-day timeline and journal entries you can copy.
9 min read
Read the articleTax & VAT
VAT explained: rates, registration and e-invoicing (2026)
A plain-English guide to VAT for small businesses in the UK and Europe: how it works, when to register, selling across borders, 2026 rates for 30 countries and worked examples.
11 min read
Read the article
Bring your business workflows together
Start a 14-day free trial — no card, no lock-in. Import your customers and invoices and see the full picture on day one.