Reorder Point Calculator
Calculates when to reorder stock based on lead time demand and safety stock levels
Average number of units sold per day
Number of days between placing and receiving an order
Extra inventory kept as a buffer against uncertainty
Enter daily sales and lead time to calculate demand
The inventory level at which you should place a new order
How many days your safety stock will last
Frequently Asked Questions
What is a reorder point?
The reorder point is the inventory level at which you should place a new order to avoid running out of stock. It accounts for the time it takes to receive new inventory (lead time) and any buffer stock you want to maintain for unexpected demand.
How do I calculate safety stock?
Safety stock is extra inventory kept to prevent stockouts from demand variability or supply delays. A simple method is to multiply the maximum daily sales variance by the maximum lead time variance. More sophisticated methods use standard deviation of demand.
What happens if I set my reorder point too low?
Setting the reorder point too low leads to stockouts, lost sales, backorders, and unhappy customers. It can also disrupt production if you are a manufacturer. The cost of a stockout often exceeds the cost of carrying a bit more safety stock.
What is lead time in inventory management?
Lead time is the number of days between placing a purchase order and receiving the inventory. It includes supplier processing time, manufacturing time, and shipping. Longer and more variable lead times require higher reorder points and more safety stock.
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