Reorder Point Calculator with Safety Stock
Enter your average daily demand, supplier lead time and the service level you want. The calculator adds safety stock, based on how much demand and lead time vary, to the demand you expect while waiting. It says when to reorder; the EOQ calculator says how much.
Updated
Report a problem
Formula
Reorder point = average daily demand × lead time + safety stockSafety stock = z × √(lead time × σd² + daily demand² × σL²)zis the standard normal value for the service level (95% gives 1.645, 99% gives 2.326).
σd is the standard deviation of daily demand and σL the standard deviation of lead time in days.
Worked example
Demand 50 a day, lead time 7 days, service level 95%, σd = 10, σL = 1 day.
- Demand during lead time: 50 × 7 = 350.
- Variance term: 7 × 10² + 50² × 1² = 700 + 2,500 = 3,200, and √3,200 = 56.57.
- Safety stock: 1.645 × 56.57 = 93.05.
- Reorder point: 350 + 93.05 = 443.05 units.
Assumes roughly normal demand, independent of lead time. It is an estimate.
Another example
Demand 20 a day, lead time 10 days, service level 90%, σd = 4, σL = 0.
- Demand during lead time: 20 × 10 = 200.
- Safety stock: 1.2816 × √(10 × 16) = 1.2816 × 12.65 = 16.2.
- Reorder point: 216.2 units.
When to use it
Use it for items you restock repeatedly with a supplier delay, to stop stock-outs without holding excess. Set a higher service level for critical items and a lower one for slow, low-margin lines. Recalculate when demand or supplier performance changes.
Common mistakes
- Using average demand but ignoring variation. That gives about a 50% chance of a stock-out per cycle.
- Mixing units: demand per week with lead time in days.
- Using lead time quoted by the supplier rather than the measured one.
- Pushing the service level toward 100%. Safety stock grows quickly near the top.
How it differs
The reorder point is a trigger level. Economic order quantity is the batch size. Inventory turnover shows how fast stock sells once you hold it, and the working capital calculator shows the cash it ties up.
Frequently asked questions
What is a reorder point?
It is the stock level at which you place a new order so that stock arrives before you run out. With 50 units sold a day and a 7-day lead time, expected demand during the wait is 350 units, so that is the reorder point before any safety stock.
How is safety stock calculated here?
Safety stock = z × √(lead time × demand variation² + daily demand² × lead time variation²). With demand 50 a day, 7 days of lead time, variation of 10 units a day and 1 day, and a 95% service level (z = 1.645), safety stock is 1.645 × √3200 = 93.
What does service level mean?
It is the chance of not running out of stock during one replenishment cycle. At 95%, you expect a stock-out in about 1 cycle in 20. Higher levels need much more safety stock: going from 95% to 99% raises z from 1.645 to 2.326.
What if I do not know my variation?
Take the standard deviation of daily sales (or lead times) over the last few months from your records. If you enter 0 for both, safety stock is 0 and the reorder point is just demand during lead time. This model assumes demand is roughly normally distributed and is an estimate, not a guarantee.
What is the reorder point formula without safety stock?
Reorder point = average daily demand × lead time in days. With 50 units a day and a 7-day lead time it is 350 units. This is only right if demand and lead time never vary, so most businesses add safety stock on top.
What is a simple safety stock formula?
A common shortcut is maximum daily use × maximum lead time minus average daily use × average lead time. With a maximum of 70 a day and 9 days against 50 a day and 7 days, that is 630 − 350 = 280. It is cruder and usually higher than the statistical 93 for a 95% level.
What service level should I choose?
Use the cost of a stock-out as your guide. Going from 95% to 99% raises z from 1.645 to 2.326 and safety stock from 93.05 to about 131.6 units in the example, roughly 41% more stock. Critical parts may justify it, slow cheap items usually do not.