Reorder Point Calculator
Calculate exactly when to reorder inventory based on your demand rate, lead time, and safety stock. Never run out of stock or overorder again.
- Free supply chain tool
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Calculate Your Reorder Point
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Fill in average demand and lead time at minimum to calculate your reorder point
Understanding Reorder Points
Demand Rate
Lead Time
Safety Stock
Reorder Point Scenarios
ROP Set Too Low
Orders placed too late, leading to stockouts, lost sales, and emergency expediting costs.
Risk: Stockouts, lost revenue, damaged customer relationships
ROP Properly Calibrated
Orders arrive just in time with appropriate safety buffer. Minimal carrying costs while preventing stockouts.
Result: Balanced inventory, optimal working capital
ROP Set Too High
Orders placed too early, resulting in excess inventory, higher carrying costs, and tied-up capital.
Risk: Excess inventory, obsolescence, high carrying costs
What is a reorder point in inventory management?
A reorder point (ROP) is the predetermined inventory level that triggers a new purchase order. It ensures that new stock arrives before existing inventory is completely depleted. The reorder point accounts for the average demand during the supplier lead time and includes a safety stock buffer to absorb unexpected demand spikes or delivery delays. Properly calculated reorder points are essential for maintaining optimal inventory levels, minimizing carrying costs, and preventing costly stockouts.
The Reorder Point Formula
ROP = (d × LT) + Safety Stock
Know exactly when to place your next order to avoid stockouts
Frequently asked questions
What is a reorder point?
A reorder point (ROP) is the inventory level at which a new purchase order should be placed to replenish stock before it runs out. It accounts for the average demand during the lead time plus a safety stock buffer to protect against variability in demand or supplier delivery. When your on-hand inventory drops to or below the reorder point, it signals that it is time to place a new order.
How do you calculate reorder point?
The reorder point formula is: Reorder Point = (Average Daily Demand x Average Lead Time) + Safety Stock. For example, if your average daily demand is 50 units, your lead time is 10 days, and your safety stock is 200 units, your reorder point would be (50 x 10) + 200 = 700 units. When inventory reaches 700 units, you should place a new order.
What is the difference between reorder point and safety stock?
Safety stock is the extra inventory kept on hand to guard against unexpected surges in demand or delays in supplier delivery. The reorder point includes safety stock as one of its components. While safety stock is the buffer, the reorder point is the total trigger level that tells you when to order. Reorder point = demand during lead time + safety stock, so safety stock is always a subset of the reorder point calculation.
How does lead time affect reorder point?
Lead time has a direct and significant impact on the reorder point. Longer lead times mean you need to reorder earlier because you will consume more inventory while waiting for the new shipment to arrive. If your lead time doubles, the demand-during-lead-time component of your reorder point also doubles, resulting in a much higher reorder point. Reducing lead time is one of the most effective ways to lower inventory requirements.
What happens if you set the reorder point too high or too low?
Setting the reorder point too high leads to excess inventory, higher carrying costs, increased risk of obsolescence, and tied-up working capital. Setting it too low risks stockouts, lost sales, production stoppages, expedited shipping costs, and damage to customer relationships. The optimal reorder point balances the cost of carrying extra inventory against the cost of stockouts, which is why accurate demand forecasting and lead time data are essential.
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