Guides › Reorder point formula
The reorder point formula, worked through
The reorder point is the stock level at which you place the next order. Above it you are fine, below it you are gambling on the supplier being quick. The formula is simple. Getting the inputs honest is the hard part.
Last reviewed 16 August 2026
Reorder point = lead time demand + safety stock
Where lead time demand is average units sold per day multiplied by days to restock and safety stock is your cover for the days both of those turn out worse than average.
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Lead time demand
How many units you will sell while waiting for the order to arrive.
Average units sold per day × days to restock.
Sell 8 a day with a 21 day restock and you will sell 168 units before the new stock lands. That is the amount you must still be holding on the day you place the order.
The lead time people actually use is wrong
This is where the formula usually breaks. Merchants use the supplier's quoted production time and forget everything around it.
The honest lead time is the whole elapsed period:
- Noticing you need to order and your own approval time
- Supplier production or picking
- Transit, including customs for anything imported
- Receiving, counting and booking into Shopify
A supplier quoting two weeks routinely turns into five or six once all of that is counted. If your reorder point uses the two, it is roughly a third of what it needs to be.
Measure it, do not estimate it. Look at your last three orders of a product. Date you decided to order, date it became sellable. Use the longest of the three, not the average, because the reorder point exists to survive the bad case.
Safety stock
Lead time demand assumes the average happens. Safety stock covers the weeks it does not: demand spikes, a supplier slips, a shipment sits in customs.
A workable starting point is a quarter to a half of lead time demand, weighted by how erratic the product is. The statistical version, which uses demand variability and a service level, is in the safety stock formula.
A full example
A steady selling product:
- Average sales: 8 units a day
- Honest lead time: 21 days
- Lead time demand: 8 × 21 = 168
- Safety stock at a third: 56
- Reorder point: 224 units
So when stock reaches 224 you order. It looks like a lot of stock to be reordering at, which is exactly why stores that pick round numbers run out. The number is large because the lead time is long.
Applying it across a catalogue
Doing this per SKU by hand does not scale. It does not need to.
- Calculate properly for the products that hurt. Top sellers and long lead time imports.
- Band everything else by rough sales rate and lead time, three or four bands, one number each.
- Set the alert threshold equal to the reorder point. They are the same number: one is the level, the other is being told you reached it.
- Correct from evidence. Ran out despite the alert firing, raise it. Alerted for a month with nothing happening, lower it.
To be clear about what we do. Stockwell does not calculate reorder points or raise purchase orders. It watches the stock level and tells you when you have reached the number you decided on. The arithmetic above is yours or your inventory system's.
Being told you reached the number
Once you have a reorder point, something has to notice you crossed it. Stockwell holds that number per SKU and emails your team when stock passes it, per location.
Get Stockwell on the Shopify App Store Free plan covers 50 SKUs with a daily summary. Paid plans add instant alerts and more recipients. No card needed to start.Common questions
What is the reorder point formula?
Reorder point equals lead time demand plus safety stock, where lead time demand is average units sold per day multiplied by days to restock. Selling 8 a day with a 21 day lead time and a 56 unit buffer gives a reorder point of 224.
Is the reorder point the same as a low stock threshold?
In practice yes. The reorder point is the level at which you order, the low stock threshold is the level at which you are told. Set them to the same value so the alert fires exactly when action is needed.
Why is my reorder point so high?
Almost always a long lead time. The formula multiplies daily sales by restock days, so a six week lead time produces a large number. That is correct. If it looks wrong, check you used the honest elapsed lead time rather than the supplier's quoted production time.