How to Calculate Reorder Point

The reorder point tells you when to place an order so that new stock arrives before you run out. It is a simple formula, but the inputs need care.

The formula

The first part is the stock you expect to sell while waiting for the supplier. Safety stock is the buffer for demand swings and late deliveries.

Worked example

When stock plus open orders falls to 180, order again.

Choosing the inputs

• Use recent sales, not lifetime averages; seasonality matters.
• Use real supplier lead times from past receipts, not promised ones.
• Count open purchase orders as stock on the way.
• Revisit the numbers regularly.

For the buffer, see our safety stock formula guide.

Common mistakes

• Ignoring open orders, which causes double ordering
• Using one reorder level for every season
• Setting the same safety stock for all items regardless of value or variability
• Never updating levels

Automating it

In NexoraIMS each product has a reorder level, and the Reorder page lists items at or below it (counting open POs), grouped by default supplier with a suggested quantity and a one-click draft PO. A demand forecast adds a "will run short" view. See reorder point software.

Reorder Point & Replenishment SoftwarePurchase Order Management SoftwareInventory Analytics & ABC AnalysisABC Analysis in InventoryInventory Turnover RatioSafety Stock Formula