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Reorder Point and Safety Stock Calculator

Find the stock level that should trigger your next purchase order. Choose the statistical method (a service level with demand and lead time variability) or the simple max minus average method, then see your safety stock, your reorder point and whether to order today.

Questions

What is a reorder point?
The reorder point is the stock level at which you place a new purchase order so the goods arrive before you run out. It equals the demand you expect during the supplier's lead time plus safety stock.
How do you calculate safety stock?
The statistical method multiplies the Z score for your service level by the variability of demand over the lead time: Z × √(L × σd² + d² × σL²), where d is average daily demand, σd its standard deviation, L the average lead time in days and σL its standard deviation. The simple method takes maximum daily sales times the longest lead time, minus average daily sales times the average lead time.
What service level should I choose?
It is a trade off between stockouts and cash tied up in stock. A 95% cycle service level (a Z score of about 1.645) means you expect to run out before the next delivery arrives in about 1 replenishment cycle out of 20. Best sellers usually justify a higher level than slow movers, because a stockout costs more sales and ranking.
Should I count stock that is already on order?
Yes. Compare the reorder point with your inventory position: units on hand plus units on order that have not arrived yet, minus any already promised to customers. Otherwise you reorder twice for the same gap.
What lead time should I use for Amazon FBA stock?
Use the full time from placing the purchase order until the units are available to sell: production, transit to Amazon and check in. If that time varies, enter its standard deviation too, because lead time variability often needs more safety stock than demand variability.
Does the statistical method suit slow sellers?
The formula assumes demand is roughly normal. For items that sell a few units a month with many zero days it can misstate safety stock, so a minimum stock level or a simple days of cover rule is often more reliable for them.