What is the reorder point formula?

Reorder point = (average demand × lead time) + safety stock. The first part is the demand you'll see while you wait for replenishment; the second is the buffer for when demand or lead time runs high. For example, 100 units/day over a 9-day lead time with 99 units of safety stock gives (100 × 9) + 99 = 999 units.

How do you calculate the reorder point without safety stock?

Without safety stock, the reorder point is just the demand during the lead time: average demand × lead time. At 100 units/day and a 9-day lead time that's 900 units. This assumes demand and lead time are perfectly steady, so in practice you add safety stock on top.

What is the difference between reorder point and reorder quantity?

The reorder point tells you WHEN to order — the on-hand level that triggers a purchase. The reorder quantity tells you HOW MUCH to order, which is usually set by the economic order quantity (EOQ). You use them together: reorder when stock hits the reorder point, and order the EOQ amount.

What units should demand and lead time be in?

They must match. If demand is per day, lead time must be in days; if demand is per week, lead time must be in weeks. Mixing them — like weekly demand with a lead time in days — is the most common reorder point mistake and produces a wildly wrong number.

How to Calculate the Reorder Point

The reorder point is the on-hand quantity that should trigger your next order. The formula is simple: ROP = (average demand × lead time) + safety stock. The first part covers demand while you wait for the shipment; the safety stock covers the bad stretch. Here’s the math with worked examples, the unit trap that trips people up, and how the reorder point pairs with EOQ.

The formula

ROP = (average demand × lead time) + safety stock. Take the demand you’ll see across the lead time, then add the buffer that protects you when demand or lead time runs high. Say you sell 100 units a day, replenishment takes 9 days, and you hold 99 units of safety stock: ROP = (100 × 9) + 99 = 999 units. When on-hand stock drops to 999, you place the order — the 900 carries you through the 9-day wait, and the 99 covers a bad run.

Without safety stock: just the lead-time demand

Strip out the buffer and the reorder point is simply the demand during the lead time: 100 × 9 = 900 units. That number only holds if demand and lead time never vary — which they always do — so in practice you almost always carry safety stock on top. If you set the reorder point at 900 here, roughly half your cycles would stock out before the truck arrives.

The reorder point is a trigger, not a target. It’s the level that says “order now,” not the level you aim to keep on the shelf.

Keep the units consistent

The single most common reorder-point error is mismatched units. Demand per day needs lead time in days; demand per week needs lead time in weeks. If you move 700 units a week and the lead time is 2 weeks, the lead-time demand is 700 × 2 = 1,400, and with 300 units of safety stock the reorder point is 1,700 units. Pull the daily rate into a weekly formula by mistake and you’ll be off by a factor of seven.

Reorder point vs. reorder quantity

They answer different questions. The reorder point is when to order. The reorder quantity is how much, and it’s usually set by the economic order quantity (EOQ). You use them as a pair: when stock falls to the reorder point, you place an order for the EOQ amount. The inventory planning guide shows how the two fit together.

Where the safety stock comes from

The buffer in the formula isn’t a guess — it’s sized from your demand variability and a target service level. See how to calculate safety stock for both methods and the lead-time factor that can triple it. Get the safety stock right and the reorder point falls out of it.