When to use it
Use this formula when you have stable enough demand and a supplier lead time estimate, and you want a simple replenishment trigger for each SKU.
Reorder Point Formula with Safety Stock
The reorder point formula with safety stock is reorder point = average daily demand x lead time days + safety stock. Safety stock is the buffer for demand changes and supplier delays; reorder point is the inventory position where you review or place a replenishment order.
Single-SKU calculator
How the calculation works
Formula comparison
Safety stock estimates the buffer. Reorder point adds that buffer to expected demand during lead time: average daily demand x lead time days + safety stock.
Required CSV fields
Use average_daily_sales, lead_time_days, lead_time_variability_days, desired_service_level, current_stock, and incoming_stock to calculate and compare the result.
Input fields explained
| Field | Why it matters |
|---|---|
| average_daily_sales | Raises or lowers expected demand during lead time. |
| lead_time_days | Controls how many days of demand must be covered before replenishment arrives. |
| lead_time_variability_days | Can increase safety stock when suppliers are inconsistent. |
| desired_service_level | Higher service levels increase the buffer. |
| current_stock and incoming_stock | Do not define the reorder point, but decide whether the SKU is below it. |
Worked example
If average demand is 5 units/day and lead time is 14 days, expected lead-time demand is 70 units. If safety stock is 25 units, reorder point is 95 units. If inventory position is 80 units, the SKU is below reorder point.
Common mistakes
- Using safety stock and reorder point as the same number.
- Increasing reorder point without checking whether demand or lead time actually changed.
- Ignoring supplier delays when calculating safety stock.
- Comparing reorder point to current stock only when incoming stock is already on order.
When not to rely on the result
Do not rely only on these formulas for new products, seasonal products, promotion periods, or SKUs with long stockout history. The inputs may not represent normal demand.
FAQ
Is safety stock part of reorder point?
Yes. Reorder point includes expected demand during lead time plus safety stock.
When should I increase safety stock?
Increase it when demand is more variable, suppliers are less reliable, or stockouts are more costly.
Can reorder point go down?
Yes. It can go down when daily demand falls, supplier lead time improves, or you choose a lower safety stock buffer.