Reorder point and safety stock calculator
Safety stock covers demand that runs above average while you wait for a delivery. The reorder point adds that buffer to the units you expect to sell during the lead time. Place the next order when stock on hand, plus stock already on order, falls to this level.
Formula
Lead-time demand = average daily demand × lead time in days Safety stock = Z × daily standard deviation × square root of lead time Reorder point = lead-time demand + safety stock
Z is the service factor. 1.28 is about 90%. 1.65 is about 95%. 2.05 is about 98%. 2.33 is about 99%. Lead time is treated as fixed. If your supplier's lead time also varies, this safety stock is a lower bound.
Worked example
Average demand is 20 units a day and lead time is 10 days, so lead-time demand is 200 units. Daily demand has a standard deviation of 5. At Z = 1.65, safety stock is 1.65 × 5 × √10, about 26.09 units. The reorder point is about 226.09, which rounds up to 227 units.
FAQ
What does the reorder point mean?
It is the stock level at which you place the next order. It covers the units you expect to sell while the delivery is on the way, plus a safety stock for days that run hotter than average. Count units already ordered and not yet received, or you will reorder too soon.
What is the safety-stock formula?
Safety stock = Z × (standard deviation of daily demand) × square root of lead time in days. Lead time is treated as constant, and each day's demand is treated as independent. A Z of 1.65 is a common stand-in for about a 95% cycle service level. It is not a promise that 95% of orders will arrive before you stock out.
Why take the square root of the lead time?
If the daily swings are independent, the uncertainty over many days grows with the square root of the number of days, not with the number of days itself. A 10-day lead time uses the square root of 10, about 3.16, not 10. A longer lead time still raises safety stock, just more slowly than a straight line.
Should the reorder point be a whole unit?
Yes, if you cannot order a fraction. The page shows the exact reorder point and the next whole unit at or above it. In the worked example the exact point is about 226.09 units, so the order trigger rounds up to 227.
The result is a planning estimate from the numbers on this page. It is not an invoice, a tax filing, or a marketplace statement.