Stockouts cost you sales, customer trust, and scrambling time. Learn how to calculate reorder points and set up alerts so you order at the right time — not too early (tying up cash) and not too late (running out).
Last updated: 2026-01-02
Without proper reorder points, you're either stocking out or tying up cash in excess inventory.
When you run out, customers go elsewhere. Repeat customers become one-time customers. Revenue disappears.
Ordering too early or too much means money sitting on shelves instead of working for your business.
Without data-driven reorder points, you're constantly checking stock levels and making last-minute orders.
A simple calculation that tells you exactly when to reorder.
Reorder Point = (Average Daily Sales × Lead Time) + Safety Stock
| Variable | What It Means | Example |
|---|---|---|
| Average Daily Sales | How many units you sell per day on average | 10 units/day |
| Lead Time | Days from ordering to receiving inventory | 7 days |
| Safety Stock | Buffer for demand spikes or supplier delays | 20 units |
| Reorder Point | When to place the order | (10 × 7) + 20 = 90 units |
You sell an average of 10 units per day of Widget A. Your supplier takes 7 days to deliver. You want 20 units of safety stock as a buffer.
Reorder Point = (10 × 7) + 20 = 90 units
When your inventory of Widget A drops to 90 units, place your order. During the 7-day lead time, you'll sell approximately 70 units, leaving you with your 20-unit safety buffer when the shipment arrives.
Safety stock protects you from uncertainty. Here's a practical approach for small businesses.
Begin with 1-2 weeks of average sales as your safety stock baseline. This covers most normal variations.
Add more buffer for items where stockouts hurt badly — your top sellers, seasonal products, or items with unreliable suppliers.
Reduce safety stock for items that are easy to rush-order, have multiple suppliers, or don't significantly impact revenue if temporarily out.
If you're regularly stocking out, add more buffer. If you always have excess when orders arrive, reduce it. Let data guide you.
Once you have reorder points calculated, configure your inventory software to alert you automatically.
Enter your calculated reorder point as the minimum stock level for each key item. This is the threshold that triggers alerts.
Turn on email, SMS, or in-app notifications so you get alerted immediately when stock drops below the threshold.
Check the low stock report regularly — daily or weekly depending on your sales volume. This gives you a consolidated view of everything that needs reordering.
The whole point of reorder points is early warning. When you get an alert, act on it — place the order before you run out.
Even simple reorder point systems can fail if you make these errors.
Demand changes. Suppliers change lead times. Review reorder points quarterly or when you notice issues.
Different suppliers have different lead times. Account for this when calculating reorder points for each item.
A critical top-seller needs more buffer than a slow-moving accessory. Adjust safety stock based on item importance.
Holiday rushes, summer slowdowns — seasonal items need adjusted reorder points before peak periods.
StockZip makes it easy to set minimum stock levels and get notified before you run out. See what needs attention at a glance with the low stock report.
Common questions about scanning, offline mode, pricing, and migration.
A reorder point is the inventory level at which you should place a new order with your supplier. When stock drops to this level, you trigger a reorder to avoid running out before the next shipment arrives. It accounts for lead time and includes a safety buffer for unexpected demand.