The formula
Reorder point = (daily sales × lead time) + safety stock. At 12 units a day and a 21-day lead time, you burn 252 units while waiting; add 60 of safety stock and you should reorder at 312 units on hand.
Safety stock is a judgement call
It covers demand spikes and supplier delays. A common starting point is one to two weeks of sales; increase it for unreliable suppliers, long ocean freight, or products with sharp seasonality. Every unit of safety stock is cash sitting still — the goal is enough, not maximum.
Why static reorder points fail
- Seasonality: Q4 demand at 3× baseline makes a fixed point useless
- Promotions: a campaign needs its own reorder plan
- Supplier volatility: Chinese New Year alone can add three weeks
- Cash constraints: sometimes you reorder later and accept the risk
Pair it with lead time
Use the lead time calculator to build the input: ordering + production + shipping + buffer. Underestimating lead time is the most common cause of stockouts in the first year.
Frequently Asked Questions
What is safety stock?
Extra inventory held to absorb demand spikes and supplier delays.
How often should I recalculate?
Monthly, or whenever the sales rate shifts by more than 20%.
Does reorder point include stock in transit?
It should be based on on-hand plus confirmed inbound, depending on how your system counts availability.
Assumptions & disclaimer
Results are estimates for planning. Fee schedules, tax brackets and deduction limits change; confirm current figures with the marketplace, the IRS or a qualified accountant before making decisions. Nothing here is financial, tax or legal advice.
Privacy & Your Data
BizCalcTool runs entirely in your browser. The figures you enter are never uploaded, stored or shared — there is no backend to send them to.