How it works
How to set a reorder point
Measure daily demand per SKU
Total units sold in the last 30-60 days divided by the number of days. Per SKU. For seasonal items use the most recent comparable period, not year-round average.
Confirm supplier lead time
Days from placing a PO to receiving goods at your warehouse. Include customs, QC, and internal processing. Ask suppliers for worst-case, not best-case.
Set a realistic safety buffer
7-14 days is typical. Higher for overseas suppliers with unreliable lead times. Lower for local suppliers shipping daily. The buffer is what prevents stockouts when demand spikes.
Reorder points that prevent stockouts
Stockouts aren't just lost sales. On Amazon they hurt rankings. On Shopify they hurt conversion. On marketplaces they hurt trust.
The formula in plain English
Reorder point = (daily demand × lead time) + (daily demand × safety buffer). You reorder when you have exactly enough to cover the lead time plus your buffer. Any earlier ties up cash; any later risks stockouts.
Lead time is almost always longer than stated
Suppliers quote best-case. Shipping delays, customs, and internal QC all add time. Assume 20-30% longer than the quoted lead time. A supplier saying '14 days' usually means 18-21 in practice.
Seasonality changes the math
Q4 demand can 3-5× Q1 baseline for consumer goods. Running the calculator with year-round average during BFCM prep is a recipe for running out. Use the most recent 30 days of demand, or Q4 last year for Q4 this year.
Track two reorder points: trigger and panic
The 'trigger' point is where you place a standard order. The 'panic' point (typically 50% of trigger) is where you expedite shipping at higher cost. Having both prevents you from missing a reorder deadline quietly.
Marketplace penalties for stockouts
Amazon reduces organic ranking for out-of-stock listings and penalizes your account health score. Walmart and eBay similar. For marketplace sellers, the real cost of a stockout is future lost sales for 30-60 days after restocking.
Review velocity tells you when to expand
Products getting consistent 5-star reviews sell faster over time. Monitor review velocity on your top SKUs and scale reorder quantities up 20-30% before demand spikes hit. WiserReview flags this automatically.
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FAQ
Questions, answered
The inventory level at which you place a new supplier order. Calculated so that incoming stock arrives just as your current supply runs low (plus your safety buffer). Avoid stockouts without overcapitalizing in inventory.
Safety stock is the minimum buffer you want on hand beyond the lead time demand. Reorder point includes both the lead time demand AND the safety stock. ROP = (daily demand × lead time) + safety stock.
7 days for reliable local suppliers with consistent lead times. 14-21 days for overseas suppliers. 30 days for seasonal products with high demand variance. The more variable your demand, the higher your buffer needs to be.
Per SKU. Store-wide averages hide SKU-level stockouts. Calculate reorder points for your top 20% of SKUs (which typically drive 80% of revenue). For long-tail SKUs, a simpler days-of-supply rule works.
Monthly for stable categories. Weekly leading up to peak season. Any time a key SKU hits a new demand trajectory (viral moment, influencer post, seasonal shift). The formula only works with current inputs.
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