What Is a Reorder Point and How to Calculate It

A reorder point is the inventory level at which you should place a new order with your supplier. Fall below it, and you risk running out of stock before the new shipment arrives. Order too far above it, and you're tying up cash in inventory that's sitting in your warehouse doing nothing. (Note: always base this on your available inventory, not your on-hand total — here's why.)

Getting your reorder points right is the single most impactful thing you can do for your inventory management. Here's how it works.

The Reorder Point Formula

The basic formula is straightforward:

Reorder Point = (Average Daily Sales × Lead Time in Days) + Safety Stock

Let's break that down with a real example. Say you sell a particular candle that averages 5 units per day. Your supplier takes 14 days from order to delivery. And you keep 7 days of safety stock as a buffer.

Reorder Point = (5 × 14) + (5 × 7) = 70 + 35 = 105 units

This means when your available stock of that candle drops to 105 units, it's time to order more. During the 14 days it takes your supplier to deliver, you'll sell roughly 70 units — leaving you with 35 units of safety stock to cover any unexpected spikes or delays.

The Three Numbers You Need

1. Average Daily Sales (Sales Velocity)

This is how many units of a product you sell per day, on average. The tricky part is choosing the right time period to measure. A 14-day average is responsive to recent trends but volatile. A 90-day average is stable but might not reflect current demand.

For most products, a 30-day or 60-day average gives you a good balance. If your sales are seasonal or you recently ran a promotion, consider whether those periods are skewing your average. Our guide on choosing the right sales period covers this in detail.

2. Lead Time

This is the total time from when you place an order to when the stock is on your shelves and available to sell. It includes supplier processing time, manufacturing (if applicable), shipping, customs (for international suppliers), and your own receiving and shelving time.

Most merchants underestimate lead time by only counting shipping days. A supplier might ship in 7 days, but if it takes them 5 days to process your order, 3 days in customs, and 2 days for you to receive and shelve it, your actual lead time is 17 days — not 7. Our lead time guide walks through every component.

3. Safety Stock

Your buffer against uncertainty. Demand isn't perfectly predictable and suppliers aren't perfectly reliable, so safety stock covers the gap. The standard approach is to express safety stock as additional days of coverage — typically 7-14 days for most products.

The riskier the product (high sales volume, unreliable supplier, long lead time), the more safety stock you want. The less risky (slow seller, reliable supplier, short lead time), the less you need. Learn more about how to calculate the right safety stock level.

Why Manual Reorder Points Break Down

The formula is simple. The problem is doing it for every product, every week.

If you sell 200 products, you need to calculate 200 reorder points — each with its own sales velocity, lead time, and safety stock requirement. Then you need to recalculate them regularly because sales velocity changes. The product that sold 5/day last month might be selling 8/day now, which means its reorder point has shifted from 105 to 168 units without you noticing.

Merchants who try to manage this manually typically do one of two things: they set static reorder points that drift out of date, or they give up on the math entirely and just eyeball it. Both lead to the same outcome — stockouts on fast movers and overstock on slow ones.

Automating Reorder Points with Sensible Forecasting

Sensible Forecasting calculates the reorder point for every product in your store, automatically, every day. It reads your sales data from Shopify, applies your chosen sales period (14, 30, 60, 90 days, or weighted average), factors in the lead time and safety stock you've configured, and tells you exactly when each product needs to be reordered.

Products are sorted by urgency — the ones that need ordering first are at the top of the list. You can filter by vendor to create supplier-specific orders, and export to CSV or XLSX when it's time to send a purchase order.

Instead of maintaining a spreadsheet with 200 formulas, you check one dashboard. And with daily or weekly email reports, you don't even have to remember to check — Sensible Forecasting tells you when something needs attention.