Reorder Point Calculator
Calculate the Reorder Point (ROP) for your inventory. The ROP is the inventory level that triggers the placement of a new order to avoid stockouts.
It's calculated based on your **Average Daily Usage** and the **Lead Time** required to receive a new order.
Enter Inventory Data
Understanding the Reorder Point
What is a Reorder Point (ROP)?
The Reorder Point (ROP) is the minimum unit quantity a business should have in stock before placing a new order for more units. Its purpose is to prevent stockouts while waiting for new inventory to arrive.
Basic Reorder Point Formula
The most basic reorder point formula, without considering safety stock, is:
Reorder Point = Average Daily Usage × Lead Time
- Average Daily Usage: How many units you use or sell on average per day (or per week, etc.).
- Lead Time: The number of days (or weeks, etc.) it takes from the moment you place an order to the moment the inventory arrives and is available for use.
It is crucial that the units of time for Usage and Lead Time are consistent (e.g., units *per day* and Lead Time in *days*).
Considering Safety Stock (More Advanced)
A more robust Reorder Point calculation includes safety stock:
Reorder Point = (Average Daily Usage × Lead Time) + Safety Stock
Safety Stock is extra inventory held to prevent stockouts caused by unexpected demand spikes or delays in delivery. This basic calculator does not include safety stock for simplicity, but it's an important factor in real-world inventory management.
Reorder Point Examples
Click on an example to see the calculation based on the basic formula (Usage × Lead Time):
Example 1: Retail Store Item
Scenario: A retail store sells an average of 15 units of Product A per day. The supplier takes 4 days to deliver new stock.
1. Known Values: Average Daily Usage = 15 units/day, Lead Time = 4 days.
2. Formula: ROP = Usage × Lead Time
3. Calculation: ROP = 15 × 4
4. Result: ROP = 60 units.
Conclusion: When the stock level of Product A reaches 60 units, the store should place a new order.
Example 2: Manufacturing Component
Scenario: A factory uses an average of 50 units of component B per week. The lead time for component B from the supplier is 2 weeks.
1. Known Values: Average Weekly Usage = 50 units/week, Lead Time = 2 weeks.
2. Formula: ROP = Usage × Lead Time
3. Calculation: ROP = 50 × 2
4. Result: ROP = 100 units.
Conclusion: The factory needs to reorder component B when stock drops to 100 units.
Example 3: Office Supplies
Scenario: An office uses about 5 reams of paper per day. The supplier delivers paper in 3 days.
1. Known Values: Average Daily Usage = 5 reams/day, Lead Time = 3 days.
2. Formula: ROP = Usage × Lead Time
3. Calculation: ROP = 5 × 3
4. Result: ROP = 15 reams.
Conclusion: When the paper supply is down to 15 reams, the office administrator should place the next order.
Example 4: Online Store Item
Scenario: An e-commerce store sells an average of 75 units of product C per month. The lead time from their distributor is 0.5 months (approx. 15 days).
1. Known Values: Average Monthly Usage = 75 units/month, Lead Time = 0.5 months.
2. Formula: ROP = Usage × Lead Time
3. Calculation: ROP = 75 × 0.5
4. Result: ROP = 37.5 units.
Conclusion: The store should reorder when inventory reaches approximately 38 units (round up for safety). Note: Using consistent time units (months) is key.
Example 5: Restaurant Ingredient
Scenario: A restaurant uses an average of 12 kg of flour per day. The bakery supplier delivers flour within 2 days.
1. Known Values: Average Daily Usage = 12 kg/day, Lead Time = 2 days.
2. Formula: ROP = Usage × Lead Time
3. Calculation: ROP = 12 × 2
4. Result: ROP = 24 kg.
Conclusion: When the flour stock reaches 24 kg, the restaurant should place a new order.
Example 6: Pharmacy Medication
Scenario: A pharmacy dispenses an average of 8 packs of a specific medication per day. The distributor's lead time is 1 day.
1. Known Values: Average Daily Usage = 8 packs/day, Lead Time = 1 day.
2. Formula: ROP = Usage × Lead Time
3. Calculation: ROP = 8 × 1
4. Result: ROP = 8 packs.
Conclusion: A new order for this medication should be placed when stock hits 8 packs.
Example 7: Janitorial Supplies
Scenario: A cleaning company uses an average of 30 units of cleaning solution per week across its sites. Their supplier takes 3 days to deliver.
1. Known Values: Average Weekly Usage = 30 units/week, Lead Time = 3 days.
2. Note: Units must be consistent. Convert Lead Time to weeks: 3 days / 7 days/week ≈ 0.43 weeks.
3. Formula: ROP = Usage × Lead Time
4. Calculation: ROP = 30 × 0.43
5. Result: ROP ≈ 12.9 units.
Conclusion: The cleaning company should reorder when stock reaches about 13 units. (Using consistent time units is crucial).
Example 8: Spare Parts for Equipment
Scenario: A service center uses an average of 0.5 spare parts per day for a common repair. The lead time for parts is 10 days.
1. Known Values: Average Daily Usage = 0.5 parts/day, Lead Time = 10 days.
2. Formula: ROP = Usage × Lead Time
3. Calculation: ROP = 0.5 × 10
4. Result: ROP = 5 parts.
Conclusion: The service center needs to reorder when they have 5 spare parts left.
Example 9: Art Supply Store
Scenario: An art store sells an average of 8 canvases of a specific size per day. Their supplier takes 5 days.
1. Known Values: Average Daily Usage = 8 canvases/day, Lead Time = 5 days.
2. Formula: ROP = Usage × Lead Time
3. Calculation: ROP = 8 × 5
4. Result: ROP = 40 canvases.
Conclusion: The art store should reorder this size canvas when stock hits 40.
Example 10: Coffee Shop Beans
Scenario: A busy coffee shop uses an average of 6 kg of coffee beans per day. Their local supplier has a lead time of just 1 day.
1. Known Values: Average Daily Usage = 6 kg/day, Lead Time = 1 day.
2. Formula: ROP = Usage × Lead Time
3. Calculation: ROP = 6 × 1
4. Result: ROP = 6 kg.
Conclusion: When the coffee bean stock is down to 6 kg, they need to place the next day's order.
Frequently Asked Questions about Reorder Point
1. What is the purpose of calculating the Reorder Point?
The main purpose is to ensure you place new inventory orders in time to receive them before your current stock runs out, preventing stockouts and lost sales, without holding excessive inventory.
2. What is the basic Reorder Point formula?
The basic formula is: Reorder Point = Average Daily Usage × Lead Time.
3. What is "Average Daily Usage"?
Average Daily Usage is the typical number of units of an item that you use or sell on a given day (or week, month, etc., depending on the time unit you use for Lead Time). It can be calculated by looking at historical sales or usage data over a specific period.
4. What is "Lead Time"?
Lead Time is the total time elapsed from the moment you decide to place an order to the moment the ordered goods are received, checked in, and available for use or sale. It includes processing, shipping, and receiving time.
5. Why must the time units be consistent?
The formula multiplies a rate (units per time period) by a duration (number of time periods). If usage is per day and lead time is in weeks, you must convert one to match the other (e.g., convert usage to per week or lead time to days) for the calculation to be correct.
6. Does this calculator include Safety Stock?
No, this basic calculator uses the formula without safety stock. In real-world inventory management, adding safety stock is common to buffer against variability in usage or lead time.
7. How is Safety Stock calculated?
Safety stock calculation varies depending on the desired service level and the variability of demand and lead time. A common simple method is (Maximum Daily Usage × Maximum Lead Time) - (Average Daily Usage × Average Lead Time).
8. What happens if I don't calculate or use a Reorder Point?
Without a calculated reorder point, you risk ordering too late (leading to stockouts and lost sales) or ordering too early (leading to excess inventory, increased holding costs, and potential waste).
9. Can I use this formula for items with very low or irregular usage?
For items with highly variable or very low usage, the basic ROP formula might not be the most effective method. More advanced inventory control techniques like "Min/Max" systems or just-in-time (JIT) might be more suitable, or the inclusion of a carefully calculated safety stock becomes critical.
10. What input values are valid?
The calculator requires positive numeric values for both Average Daily Usage and Lead Time. You must enter both values to get a result.
