Reorder point formula and how to calculate it
The reorder point is average daily usage multiplied by lead time in days, plus safety stock. The sum is simple; the skill is keeping those inputs right and current.
Tools our VAs use for this
The standard reorder point formula is: reorder point = average daily usage × lead time in days + safety stock. Average daily usage is how many units you sell a day; lead time is how many days a supplier takes to deliver after you order; safety stock is a buffer for late deliveries and busy days. For example, a line that sells 12 units a day, with a 10-day lead time and 36 units of safety stock, has a reorder point of 156 units (example figures). Reorder checks are part of the inventory management support a dedicated VA gives you every day.
On this page
What a reorder point is
Reorder point defined
A reorder point is a stock level, set for each product line (SKU). When your stock falls to that level, you place an order. Set it right and the delivery lands just as you reach your buffer. Checking stock against it every day is routine work an e-commerce virtual assistant can run.
Reorder point versus reorder level
The two terms mean the same thing. Accountancy texts tend to say re-order level; inventory software tends to say reorder point. The ACCA, a professional accountancy body, gives the re-order level in its inventory control article as the demand in the lead time, for the case where demand and lead time are certain. Adding safety stock is how most sellers allow for the fact that they are not.
The reorder point formula
Average daily usage × lead time + safety stock
Reorder point = (average daily usage × lead time in days) + safety stock
The first part, average daily usage multiplied by lead time, is the stock you expect to sell while you wait for the delivery. The second part, safety stock, is what stops you running out if the wait is longer or the sales are higher than usual.
The inputs explained
Average daily usage. Total units sold over a recent period divided by the number of days in it. Use a period long enough to smooth out odd days and short enough to reflect current demand, and count sales from every channel. Leave out days when the line was out of stock, because no sales on those days was a supply problem, not low demand. If you sell variations on eBay, list multiple items in one eBay listing explains how they are set up.
Lead time in days. The time from placing an order to the stock being ready to sell: the supplier's preparation, transit, and the time you take to check and book the delivery in. Measure it from your own purchase records, not the supplier's quote, and use calendar days if your sales run every day.
Safety stock. Extra units held as a buffer. The next section covers how to size it.
Worked example with invented figures
This is an example, not data from any real business. An online shop sells a reusable water bottle on its own site and one marketplace.
- Example sales over the last 30 days, both channels combined: 360 units
- Example average daily usage: 360 ÷ 30 = 12 units a day
- Example lead time from the supplier, measured from past orders: 10 days
- Example safety stock: 36 units (sized in the next section)
Step 1, demand during the lead time: 12 × 10 = 120 units.
Step 2, add safety stock: 120 + 36 = 156 units.
Reorder point calculator
Enter your own figures for one product line to find the stock level at which to place the next order.
Units sold a day, across every channel.
From placing an order to the stock being ready to sell.
Extra units held as a buffer. Enter 0 if you hold none.
Work out average daily usage from your sales
Total across every channel.
Leave out days when the line was out of stock.
Average daily usage = units sold in the period ÷ days in the period
Reorder point
Enter your figures above
Reorder point = (average daily usage × lead time in days) + safety stock
Step 1, demand during the lead time: average daily usage × lead time
Step 2, add safety stock: demand during the lead time + safety stock
When stock falls to the reorder point, place the order.
Treat each reorder point as a working estimate, recalculate it on a schedule, and adjust it for seasons and promotions.
The example reorder point is 156 units. When stock falls to 156, the shop places its order. Over the next 10 days it expects to sell about 120 units, leaving about 36 on the shelf when the delivery arrives. If sales run faster or the delivery is late, the 36 units of safety stock absorb the difference.
Safety stock and how much to keep
What safety stock is
Safety stock is stock you plan never to use in a normal cycle. It covers the busy day, the late supplier and the short delivery.
Safety stock versus reorder point
Safety stock is a buffer; the reorder point is a trigger. Safety stock is one of the inputs to the reorder point, and it is also the level you expect to be at when a delivery arrives. If you regularly dip below your safety stock, your reorder point is too low or your inputs are out of date.
How to size it
There is no official formula for safety stock, and there are several methods in use. A simple one a small seller can run without software is to decide how many extra days of delay you want to cover, and multiply by average daily usage:
Safety stock = average daily usage × extra days of cover
In the worked example, the shop's records show the supplier has delivered up to 3 days late, so it covers 3 extra days: 12 × 3 = 36 units. For your most important lines, cover your worst recent delay; for slow, cheap or easily replaced lines, cover less. Review the figure when your supplier's record or your sales change.
Benefits and limits of reorder points
Avoiding stock-outs
A reorder point turns "we should order soon" into a fixed trigger that anyone can check. Orders go in on time, not when someone notices an empty shelf.
Avoiding overstock
The same trigger stops you ordering too early. Without one, cash and shelf space end up tied up in units you will not need for weeks. Growing the range changes your reorder points too; see how to scale an ecommerce business in the UK.
Limits of the formula
The formula assumes that sales run at a steady average and that the lead time is fixed. Neither is quite true for most online sellers. It also tells you when to order, not how much. Treat each reorder point as a working estimate, recalculate it on a schedule, and adjust it for seasons and promotions, as covered below.
How to calculate a reorder point in Excel
Excel reorder point calculator (daily usage × lead time + safety stock) with EOQ, inside a stock sheet (.xlsx, Excel, 91 KB)
Sheet layout and formulas
Use one row per SKU and these columns:
| Column | Heading | What goes in it |
|---|---|---|
| A | SKU | Your product code |
| B | Units sold (period) | Total sold across all channels |
| C | Days in period | The length of the sales period |
| D | Average daily usage | =B2/C2 |
| E | Lead time (days) | From your own purchase records |
| F | Extra days of cover | For safety stock |
| G | Safety stock | =D2*F2 |
| H | Reorder point | =D2*E2+G2 |
| I | Current stock | From your platform or stock system |
| J | Reorder flag | =IF(I2<=H2,"REORDER","") |
Copy the formulas down for every SKU, refresh columns B and I from your sales and stock exports, and sort by column J to see what to order today. Using the worked example's figures (B 360, C 30, E 10, F 3), the sheet gives D 12, G 36 and H 156, the same answer as the hand calculation.
Online calculators
Many inventory tools and stock apps include a reorder point calculator, and some set reorder points for you. A calculator only saves typing: the result is only as good as the inputs you give it.
Reorder point and economic order quantity (EOQ)
EOQ decides how much
The reorder point tells you when to order. Economic order quantity (EOQ) tells you how much. It balances the cost of placing an order against the cost of holding stock. The ACCA article gives it as:
EOQ = √(2 × ordering cost per order × annual demand ÷ holding cost per unit per year)
Continuing the worked example, with example costs: each order costs the shop £20 to place (admin and delivery), annual demand is 12 × 365 = 4,380 units, and holding one bottle in stock for a year costs £2. Then 2 × 20 × 4,380 = 175,200; 175,200 ÷ 2 = 87,600; the square root of 87,600 is about 296. So in this example the shop orders about 296 units each time stock falls to 156.
EOQ assumes steady demand and fixed costs, and suppliers' minimum order quantities and price breaks often override it. Use it as a starting point for the order size, not a rule.
Reorder point decides when
Together the two numbers make a complete rule for each line: when stock reaches the reorder point, order the EOQ. This is the min-max idea in a more exact form; our guide to stock control methods compares it with the other methods.
Adjusting for seasons and promotions
When to adjust
A reorder point built on last month's average will be too low going into a peak and too high coming out of it. Recalculate it before each season using the same period last year as your guide, and before any promotion using the lift from your own past promotions. In the worked example, if the shop expected peak sales of 18 units a day, the reorder point would become 18 × 10 + 18 × 3 = 180 + 54 = 234 units (example figures). Bring it back down as the season ends, or you will be left holding the extra. Our inventory forecasting guide covers how to estimate demand for the season ahead.
Does every SKU need a reorder point?
Every line you restock does. Lines you are selling through, one-off buys and made-to-order products do not. For a large range, use ABC analysis to set careful reorder points on your most important lines first and simpler rules on the long tail. Our ecommerce inventory management guide explains how this fits the wider system.
Automating reorders
Software that triggers reorders
Most inventory and order management systems let you store a reorder point per SKU and alert you, or draft a purchase order, when stock reaches it. Some calculate the reorder point from your sales history.
What stays manual
Someone still has to measure real lead times, set safety stock, adjust for seasons and promotions, approve purchase orders and chase suppliers. Automated reorder points left untouched for months drift out of line with your sales.
Handing reorder checks to a virtual assistant
The daily routine is steady, rule-based work: refresh sales and stock figures, check every line against its reorder point, raise purchase orders, chase suppliers and recalculate the points each month and before every season. That suits a dedicated virtual assistant, with you approving the orders. Our list of ecommerce tasks to delegate shows the wider set. Stock levels depend on how orders and returns are handled, which an order processing VA can take on.
At Ant Assist your VA is one named person, never shared, working full time from our own managed office in Cairo, where every VA is recruited, managed and supervised. They are not freelancers and not AI, and the service is UK-managed. Your VA works UK business hours, 9am to 5pm Monday to Friday, from 20 hours a week up to a full 40-hour VA, and we replace the VA without restart cost if the fit is wrong. Access sits under NDAs and data-processing agreements, runs through password managers and is revocable. The rate starts at £5 per hour for the first 6 months on the Entry tier (3 months on Mid, 1 month on Expert); after that, Entry is £6.50 per hour full time (£1,040 a month for 160 hours) or £6.80 per hour part time (£544 a month for 80 hours). See the calculator for your hours. For help with the rest of the store as well as stock, see outsourced e-commerce support.
Questions about reorder points
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