What is Reorder point?

The reorder point is the stock level at which you should place a new purchase order: average daily sales × lead time + safety stock.

Example

20 units a day × 16 days + 33 safety stock = reorder when you hit 353 units.

Why it matters

It turns “when should I reorder?” into a simple trigger you can watch.

Calculate it: Reorder Point Calculator

Safety stock and when to reorder

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Flashcard

Question

What is reorder point?

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Answer

The reorder point is the stock level at which you should place a new purchase order: average daily sales × lead time + safety stock.

Related terms

Safety stock

Safety stock is extra inventory kept to cover demand spikes and supplier delays: Z × daily sales variation × √lead time.

Lead time

Lead time is how long it takes from placing a purchase order until the stock is available to sell — production, freight, customs and warehouse receiving.

Read more in our guide: Safety Stock and Reorder Point: When to Reorder Inventory