FLUF / THE SELLER REFERENCE
Reorder point: formula, worked example and safety stock
The stock threshold that signals when to order more of a replenishable product.
The basic reorder point formula
Reorder point = average daily unit demand × replenishment lead time in days + safety stock in units. Keep the units consistent. A weekly sales figure combined directly with lead time in days produces the wrong threshold.
Worked example
A shop sells three notebooks per day. Its supplier takes eight days to deliver stock that is ready to sell, and the shop keeps twelve notebooks as a buffer. Expected demand while waiting is 3 × 8 = 24. Adding the buffer gives a reorder point of 36 notebooks.
When to order is different from how much
Reaching 36 does not mean the shop should order 36. Order quantity depends on expected future demand, quantities already on order, supplier minimums, storage and available cash. Account for open purchase orders so an alert does not cause duplicate replenishment.
Which stock figure should trigger a reorder?
Define the quantity you monitor. A simple shop may use available stock with a manual check of incoming orders. A more developed process uses inventory position, accounting for stock on hand, on-order stock and outstanding commitments. A threshold is only useful if the monitored figure matches its assumptions.
When to review the threshold
Recalculate when supplier lead times change, a promotion alters demand or a seasonal selling window approaches. Check actual delivery dates, not just the quoted transit time. For unique or discontinued stock, a reorder point may not be actionable at all: the business needs a sourcing or substitution decision instead.
Put it into practice
Explore the related stock-management guide. For selling across marketplaces, see FLUF Connect crosslisting and current plans and pricing.
Related terms
Reference
Primary reference: Shopify. The examples on this page are illustrative, not customer results or universal benchmarks.
