How to Calculate Reorder Point (Formula + Examples)

What is a reorder point?

A reorder point (ROP) is the stock level at which you should place a new order with your supplier. It's not when you run out — it's the level at which you order, so that new stock arrives before you sell what you have left.

Without a reorder point, you're either ordering too early (tying up cash in stock you don't need yet) or too late (selling out and cancelling orders). Getting it right means you always have stock available without overstocking.

The reorder point formula

The standard formula is:

Where:

• Average Daily Sales — how many units you typically sell per day
• Lead Time — how many days it takes your supplier to deliver after you order
• Safety Stock — a buffer quantity to cover unexpected demand spikes or delays

How to calculate safety stock

A simple safety stock formula:

This covers the worst case: your highest-ever daily sales rate, sustained for the entire lead time. Most sellers use a simpler rule of thumb — 1–2 weeks of average sales — which works well for products with fairly predictable demand.

Worked example

Let's say you sell a product on eBay and Shopify:

• Average daily sales: 8 units
• Maximum daily sales (your best day ever): 15 units
• Supplier lead time: 10 days

Step 1: Calculate safety stock

Safety Stock = (15 − 8) × 10 = 70 units

Step 2: Calculate reorder point

ROP = (8 × 10) + 70 = 80 + 70 = 150 units

When your stock drops to 150 units, place your next order. By the time it arrives 10 days later, you'll have sold approximately 80 units, leaving your 70-unit safety buffer intact.

Reorder point for seasonal products

The formula above uses average sales, which works well for products with steady demand. For seasonal products — anything that spikes before Christmas, summer, or a particular event — you need to adjust your average daily sales upward during peak periods.

The easiest approach: calculate separate reorder points for peak season and off-season, and switch between them as you approach each period. If your inventory software supports it, set your reorder point higher in October–November for Christmas sellers.

Common reorder point mistakes

Using total stock instead of available stock

If you have 200 units but 50 are reserved for existing orders, your available stock is 150 — that's the number to compare against your reorder point. Using total stock leads to late orders.

Not accounting for multi-channel sales

If you sell the same product on eBay, Shopify, and Amazon, your "average daily sales" needs to cover all three channels combined. Each channel selling 3 units/day = 9 total units/day.

Never updating your reorder points

Sales velocity changes. A product that sold 3 units a day last year might sell 10 now. Review your reorder points quarterly — or use software that tracks sales velocity automatically.

How to automate reorder point alerts

Calculating reorder points manually is fine when you have 20 products. At 200 SKUs, it becomes a full-time job. The better approach is to set reorder points in your inventory software and let it alert you automatically.

In Salync, you set a reorder point per product. When stock drops to or below that level — across all channels combined — you get an automatic email alert so you can raise a purchase order. You can also raise POs directly from Salync and track when stock is due to arrive.

Quick reference: reorder point calculations