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Reorder Point Calculator

Calculate the stock level at which you must place a new order to avoid a stockout during supplier lead time.

Average Daily Demand (Units)Average units sold or consumed per day

Average Lead Time (Days)Days from order placement to receipt

Demand Std Dev (Units/Day)Standard deviation of daily demand

Lead Time Std Dev (Days)Standard deviation of lead time

Service LevelTarget stock availability rate

Reorder Point Results

Reorder Point

Units, place order at this level

Safety Stock Included

Buffer units in ROP

Avg Demand During LT

Expected consumption

Max Demand During LT

Worst-case scenario

Reorder Point Formula

ROP = (Avg Daily Demand × Lead Time) + Safety Stock

Safety Stock = Z × √(LT × σd² + d² × σLT²)

Z = service level factor • σd = demand std dev • σLT = lead time std dev

What Is a Reorder Point?

The reorder point (ROP) is the inventory level at which you must place a new purchase order so that stock arrives before you run out. It accounts for average demand during lead time plus a safety buffer for variability.

Why ROP Matters for Pakistan SMEs

Pakistani businesses frequently face extended and unpredictable lead times. A correctly calculated ROP ensures you trigger replenishment early enough to cover delays, without over-ordering and tying up working capital.

Worked Example

A distributor with average demand of 60 units per day, a 10-day average lead time, and 150 units of calculated safety stock sets ROP = (60 × 10) + 150 = 750 units. Whenever on-hand stock hits 750 units, the system triggers the next purchase order automatically.

Common Mistakes to Avoid

Setting a reorder point once and never updating it as demand or lead time changes
Confusing reorder point with reorder quantity, the two answer completely different questions
Ignoring supplier lead time variability when setting the safety stock component of the formula
Applying a single reorder point to a SKU sold from multiple warehouses without allocating stock correctly across locations

What if I ignore the reorder point? ▼

You risk stockouts, lost sales, and emergency purchases at 15-30% premium cost. In Pakistan's SME context these emergency costs are one of the most common and avoidable supply chain losses.

How often should I recalculate ROP? ▼

Quarterly at minimum, or whenever demand patterns shift, lead times change, or you change suppliers. Seasonal businesses should recalculate before each peak season.

What is the difference between reorder point and a simple minimum stock level? ▼

A minimum stock level is often a rough rule of thumb. Reorder point is calculated specifically from demand rate, lead time, and safety stock, giving a more precise and defensible trigger for purchase orders.

Should ROP be set in units or in days of cover? ▼

Units are more precise for triggering purchase orders inside an ERP system, but days of cover is a useful cross-check to sanity test the number against your Days of Inventory target.

Reorder Point Calculator,Know Exactly When to Reorder