Reorder Point Calculator
The reorder point is the inventory level that triggers a new purchase order, ensuring stock arrives before the current supply runs out. Setting the ROP correctly requires knowing your average daily demand, your supplier lead time, and how much safety stock you want to buffer against demand spikes and delivery delays. Without a defined ROP, businesses either run stockouts (losing sales and damaging customer relationships) or overstock (tying up cash and increasing storage costs). This calculator computes the average demand during lead time, the reorder point with safety stock, and the maximum ROP for worst-case scenario planning.
Reorder point formula
Demand During Lead Time = Avg Daily Demand * Avg Lead Time
Reorder Point = Demand During Lead Time + Safety Stock
Maximum ROP = Max Daily Demand * Max Lead Time
Implied Safety Stock = Max ROP - (Avg Daily Demand * Avg Lead Time)
ROP and inventory policy
- When inventory reaches the ROP, place an order for the EOQ quantity.
- Safety stock covers the gap between average and worst-case demand during lead time.
- Higher service level targets (e.g., 99% vs. 95% fill rate) require more safety stock.
- Review and update ROP regularly as demand patterns and lead times change.
Reorder point: frequently asked questions
What is the reorder point?
The reorder point (ROP) is the inventory level at which a new purchase order should be placed to avoid a stockout before the new stock arrives. ROP = (Average Daily Demand * Lead Time in Days) + Safety Stock.
How is the reorder point different from the EOQ?
The economic order quantity (EOQ) tells you how much to order. The reorder point (ROP) tells you when to order. Both are needed for a complete inventory policy: order EOQ units when stock drops to the ROP.
What is lead time in inventory management?
Lead time is the number of days between placing an order with a supplier and receiving the goods. It includes order processing time, production or pick-and-pack time, and shipping transit time. Variable lead times increase the safety stock needed.
How does safety stock affect the reorder point?
Safety stock is buffer inventory held to guard against unexpected demand spikes or supplier delays. It adds directly to the reorder point: ROP = Demand During Lead Time + Safety Stock. Higher variability in demand or lead time requires more safety stock.
What is maximum reorder point?
Maximum ROP = (Maximum Daily Demand * Maximum Lead Time). Comparing max ROP to average ROP reveals how much safety stock is implied by your demand and lead time variability. Max ROP - Average ROP = implicit safety stock needed.
Sources
- U.S. Small Business Administration: Manage Your Business Finances.
- U.S. Census Bureau: Manufacturing Inventories Survey.
Reviewed by the CalculatorHub team, edited by James Graham, 14 June 2026. See our methodology.