afety Stock Formula: How to Calculate Reorder Points

Running out of stock costs you sales, customers, and search rankings. Here's exactly how to calculate when to reorder.

The Reorder Point Formula

Reorder Point = (Average Daily Sales × Lead Time in Days) + Safety Stock

The Safety Stock Formula

Safety Stock = (Maximum Daily Sales × Maximum Lead Time) - (Average Daily Sales × Average Lead Time)

Example Calculation

• Average daily sales: 5 units
• Maximum daily sales: 8 units
• Average lead time: 14 days
• Maximum lead time: 21 days
• Safety stock = (8 × 21) - (5 × 14) = 168 - 70 = 98 units
• Reorder point = (5 × 14) + 98 = 168 units

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