Inventory Decision Guide
How to calculate reorder point with lead time
Reorder point tells you when to place the next PO so inventory covers lead-time demand plus a risk buffer. This page goes beyond the formula and shows how demand pace, lead-time assumptions, and safety stock move the threshold.
Short direct answer
Reorder point = average daily sales x lead time (days) + safety stock. If either demand or lead time rises, reorder point should rise too.
Reorder-point formula breakdown
Reorder point = Lead-time demand + Safety stock = (Average daily sales x Lead time) + Safety stock
- Lead-time demand: Units expected to sell while waiting for replenishment to arrive.
- Safety stock: Buffer to absorb volatility in demand and delays in supply.
- Practical use: Set reorder alerts at or above this threshold to reduce stockout risk.
Worked scenario
Worked example with lead-time logic
SKU baseline with medium demand and moderate supply risk.
Inputs
- Average daily sales: 35 units
- Lead time: 18 days
- Safety stock: 220 units
Output
- Lead-time demand: 630 units
- Reorder point: 850 units
- If stock drops below 850, reorder window is already tight
Scenario comparison
How demand profile changes reorder threshold
Lead time is fixed at 20 days to isolate demand impact.
| Scenario | Average daily sales | Lead time | Safety stock | Reorder point |
|---|---|---|---|---|
| Low demand | 18 units/day | 20 days | 120 units | 480 units |
| Medium demand | 32 units/day | 20 days | 180 units | 820 units |
| High demand | 48 units/day | 20 days | 250 units | 1,210 units |
Demand sensitivity
Reorder point rises fast as daily sales increase
Three safety-stock assumptions are shown for the same 18-day lead time.
The distance between lines is pure safety stock policy. The slope of each line is lead time. If lead time is unstable, your reorder point should usually be more conservative, not tighter.
Example: at 35 units/day, changing lead time from 14 to 24 days adds 350 units to lead-time demand before safety stock. Many spreadsheet setups underweight this risk.
Common mistakes
- Using old sales averages that ignore recent demand acceleration.
- Assuming supplier lead time is stable when customs or freight is volatile.
- Keeping safety stock unchanged across SKUs with different risk profiles.
- Reordering too late because threshold is based on optimistic assumptions.
Operator takeaways
- If stockouts persist, your reorder point is likely too aggressive.
- If lead time is volatile, safety stock should absorb that volatility.
- Review reorder assumptions whenever demand or supplier reliability shifts.
- Use SKU-level thresholds instead of one global rule for all products.
Turn this into operational reorder thresholds
Calculate SKU-level reorder points, safety stock, and CSV-based alert status with your own data.
FAQ
Frequently asked questions
Clarifications for lead-time and threshold decisions.
Related
Related tools
Use these next to compare scenarios and validate decisions from multiple angles.
Reorder Point Calculator (Lead Time)
Find when to reorder inventory based on lead time demand and safety stock.
Safety Stock Calculator for E-commerce
Calculate safety stock to protect against demand spikes and lead-time variability.
Upload Inventory CSV for Reorder Alerts
Upload SKU inventory data, map columns, and generate reorder urgency alerts instantly.
Days of Inventory Left Calculator
Quickly estimate how many days your current stock can support average sales.