Formula
Reorder point = Average daily demand × Lead time + Safety stockDirect answer
A reorder point is the inventory quantity that triggers a replenishment order. The simplified formula multiplies average daily demand by supplier lead time and adds safety stock. Shopify documents the same relationship in its reorder point guide.
The output is a trigger level, not an order quantity. It answers when to reorder under the entered assumptions, not how many units to buy.
Worked example
Suppose a product sells 20 units per day, replenishment takes 14 days, and the business holds 100 units of safety stock.
Expected lead-time demand is:
20 × 14 = 280 units
The reorder point is:
280 + 100 = 380 units
Under this model, reaching approximately 380 units triggers the next order.
Define demand and lead time consistently
Average daily demand should use a period relevant to the next replenishment cycle. A twelve-month average may be unsuitable for a strongly seasonal product. Lead time should cover the full interval between placing an order and having saleable stock available, not just the supplier’s production time.
Use the same unit throughout. If demand is measured in individual items, safety stock and current inventory must also be individual items rather than cases.
Safety stock is a policy input
Safety stock is a buffer against variation. It is not produced automatically by this simplified calculator because doing so requires evidence about demand and lead-time variability and a chosen service level. Shopify describes safety stock separately and includes it in the reorder point formula.
Entering zero safety stock is allowed, but the result is flagged because the scenario provides no explicit buffer for delays or demand spikes.
Reorder point and inventory turnover answer different questions
The Inventory Turnover Calculator describes how inventory value moved during a past period. A reorder point uses a planning rate and lead time to set a future operational trigger. One should not be substituted for the other.
Review both with contribution and cash constraints. A high reorder point can reduce stockout risk while tying up more cash. A low trigger can release cash while increasing the chance of unavailable products.
Common mistakes
- Treating reorder point as order quantity.
- Omitting receiving or inspection time from lead time.
- Mixing weekly demand with lead time expressed in days.
- Using average demand during a seasonal peak.
- Adding safety stock twice because it is already embedded in another input.
Limits of this calculator
The model excludes minimum order quantities, order cycles, supplier capacity, multi-location inventory, backorders, perishability and demand distributions. Recalculate when demand, lead time or the chosen buffer changes materially.
Assumptions
- Average daily demand and lead time are representative of the planning period.
- Safety stock is entered separately and reflects the chosen service-risk policy.
- Seasonality, minimum order quantities and supplier capacity are excluded.
Sources and methodology
CalcMotive publishes the formula and assumptions so you can decide whether the estimate fits your use case. See our methodology standards.
- A Retailer's Guide to Reorder Points and the ROP Formula; Shopify; accessed Jul 13, 2026
- Safety Stock vs. Reorder Point; Shopify; accessed Jul 13, 2026