Reorder points in depth

A reorder point is the stock level at which it’s time to order more. Set it well and you reorder on time, every time. This article goes deeper than the low-stock alerts basics.

The calculation

reorder point = (average daily demand × lead time in days) + safety stock

• Average daily demand — units sold per day, from your shipment history.
• Lead time — days from placing a supplier order to it being on the shelf.
• Safety stock — a buffer for demand spikes and late deliveries.

A worked example

A product sells 8/day, the supplier takes 10 days, and you want 3 days of safety stock:

(8 × 10) + (8 × 3) = 80 + 24 = 104

Set the reorder point to 104. At 104 units, you order — and you should land with ~24 still on the shelf.

Review regularly

Reorder points drift out of date. Revisit them when demand shifts (seasonal lines especially), when a supplier’s lead time changes, or when you keep stocking out or over-ordering.

Where to set it

Per product on the edit form, or in bulk via a reorder_point column in a CSV.

Tip: get reorder points right on your top 20% of SKUs first. Those drive most of your orders — and most of your painful stockouts.