Reorder Point
The inventory level that triggers a new purchase order from suppliers.
1 min readLast updated Apr 2026
Formula
(Average Daily Sales × Lead Time) + Safety Stock
Example: Daily sales: 25 units. Lead time: 21 days. Safety stock: 150 units. Reorder Point = (25 × 21) + 150 = 675 units
The inventory level that triggers a new purchase order from suppliers.
Why It Matters
Reorder points prevent stockouts by ensuring you order before running out. Without automated reorder triggers, human error leads to missed reorders, emergency air freight costs, and lost sales. It's essential for consistent inventory availability.
Formula
(Average Daily Sales × Lead Time) + Safety Stock
Example: Daily sales: 25 units. Lead time: 21 days. Safety stock: 150 units. Reorder Point = (25 × 21) + 150 = 675 units
Practical Example
Scenario
A skincare brand sets reorder points for their core products.
Calculation
Daily sales: 25 units. Lead time: 21 days. Safety stock: 150 units. Reorder Point = (25 × 21) + 150 = 675 unitsResult
When inventory hits 675 units, a PO is triggered automatically. This provides 21 days of normal sales plus 6 days buffer (150 units) for variability.
Pro Tips
- 1Automate reorder point alerts—don't rely on manual inventory checks
- 2Review and adjust reorder points quarterly as sales velocity changes
- 3Factor in holidays/weekends in lead time calculations
- 4Set different reorder points for high/low season if demand is seasonal
Common Mistakes to Avoid
Using the same reorder point year-round despite seasonal demand shifts
Not updating reorder points when lead times change (common with overseas suppliers)
Setting reorder points too low to minimize inventory (leads to stockouts)