What Is Reorder Point?
Reorder point is the exact inventory level at which you must place a new supplier order to avoid stocking out before the replenishment arrives. It is not "running low." It is a calculated trigger that combines daily sales velocity, supplier lead time, and a safety buffer for delays or demand spikes.
The Formula
Reorder Point = (Average Daily Sales × Lead Time in Days) + Safety Stock
Safety Stock = Average Daily Sales × Safety Buffer Days
If you sell 15 units per day, your supplier lead time is 14 days, and you want a 7-day safety buffer, safety stock is 15 × 7 = 105 units. Reorder point is (15 × 14) + 105 = 315 units. When inventory hits 315, it is time to place the order.
What's a Good Reorder Point?
If lead time is under a week, a 3- to 5-day safety buffer is often enough. At 7 to 14 days, many sellers move to roughly 7 buffer days. At 14 to 30 days, 10 to 14 days of protection becomes more common. Once lead times run past 30 days, simple rules start breaking down and the right stock cover can be much higher, especially when ocean freight, customs delays, or factory slippage are involved.
A good reorder point is not one fixed number forever. It should expand when sales accelerate and contract when the product slows down. Fast-moving SKUs need tighter monitoring because small forecasting errors create bigger stockouts in absolute units. Slow-moving SKUs need discipline for the opposite reason: over-ordering ties up cash in inventory that may not move for months.
Reorder point also protects revenue concentration. When one hero SKU drives a large share of sales, a stockout does more than pause orders. On Amazon it can hurt ranking, while on Shopify it mostly wastes campaign traffic and weakens repeat customer trust. That makes the cost of a weak reorder point much higher than the wholesale value of the units you forgot to buy.
How To Set Safety Buffer Days
Start with demand variability, not a fixed favorite number. A SKU that sells steadily every week can run a tighter buffer than a product that spikes after influencer posts, promotions, or seasonal demand swings. If weekly unit sales move around a lot, increase the buffer before the next stockout teaches the lesson for you.
Common Mistakes
- Using average demand during normal months and ignoring seasonal spikes. A SKU that averages 15 units per day can move 35 or 40 in peak periods, making the old reorder point dangerously low.
- Treating quoted business-day lead time as calendar days. A supplier promise of 10 business days is roughly 14 calendar days, and using the wrong number shortens your buffer by 40%.
- Giving every SKU the same safety stock rule. A product that sells 2 units per day and one that sells 50 units per day do not deserve identical coverage logic.
- Never updating the trigger after velocity changes. When daily demand rises 25%, reorder point should rise immediately, not after the next stock scare.
- Ignoring supplier MOQ constraints. If the factory forces 500-unit reorders, you need to account for the cash and storage impact instead of treating every replenishment like a flexible top-up.
- Forgetting Q4 demand multiples. A SKU that sells 20 units per day in September can move 2x that rate in late November, so a reorder point built on fall averages can fail exactly when the stock matters most.
Related Tools
Reorder Point Calculator converts daily velocity, lead time, and buffer days into a usable replenishment trigger.
Product Launch Calculator helps estimate initial demand and inventory assumptions before a SKU enters steady-state replenishment.
Related Terms
Useful follow-ups after reorder point are free shipping threshold, AOV, and safety stock concepts inside your inventory model.