Reorder point calculator
Reorder point is the demand you expect while waiting for a delivery plus safety stock. Enter average daily use, how much it varies, the lead time and a service level, and the calculator gives the stock level at which to reorder.
Set the variation to 0 if you don't track it; the safety stock is then 0 too.
The formula
Reorder point = daily use × lead time days + safety stock
Safety stock = z × daily standard deviation × √lead time days
z comes from the service level: 1.64 for 95% of cycles without a stockout, 2.33 for 99%. Both figures are rounded up, because you can't reorder part of a unit and rounding down is the stockout.
Worked through
12 units a day, varying by 4, with a 7-day lead time at 95%:
| Units | |
|---|---|
| Used during the lead time | 84 |
| Safety stock: 1.64 × 4 × √7 | 18 |
| Reorder point | 102 |
When stock on hand drops to 102, reorder.
In Atta
Each stock item can carry a reorder point. When stock on hand falls to it, Atta opens a restock request for the item's reorder quantity, and a person approves it like any other purchase. It never places that order on its own. See inventory.
Questions
What if I don't know the standard deviation?
Set it to 0 and add a safety stock you choose to the result, or estimate it from a few weeks of daily usage.
What service level should I pick?
95% is a common default. Pick higher for items where running out stops work, and lower for items you can wait on.
Related
- AI inventory management that ends in a purchase requestAtta keeps stock as a ledger, forecasts when each item runs out from measured usage and quoted lead times, and opens a restock request instead of ordering.
- What is a reorder point?A reorder point is the stock level that triggers a new order. The formula is daily demand times lead time, plus safety stock. With a worked example.
- What is safety stock?Safety stock is the extra inventory held to cover demand spikes or late deliveries. Definition, a simple formula and a worked example.