Reorder point calculator
The level your stock should never drop below before you place another order - with a buffer sized for suppliers running late and weeks running busy.
How this is worked out
Two parts, added together.
Cycle stock is what you will get through while you wait for the order: average daily use × normal lead time.
Safety stock covers the two things that actually cause stockouts - a busier week than usual, and a supplier taking longer than usual. It is the difference between your worst case and your average case: (peak use × longest lead) − (average use × normal lead).
Add them and you get the level at which placing an order still leaves you covered.
Questions
Why not just keep lots of spare stock?
Because it is cash sitting on a shelf, and it can expire, go out of season, or get damaged. The buffer figure above shows exactly what yours costs - the point is to hold enough and no more.
What if my supplier is unpredictable?
Then the gap between their normal and their worst lead time does the work. A supplier who sometimes takes three times as long forces a large buffer, which is a real cost worth putting a number on when you next talk to them.
Does this handle seasonal products?
Not on its own. Run it separately for each season using that season's daily figures - an average across a whole year will leave you short in the busy months and overstocked in the quiet ones.
Stop working this out by hand
StockRoom keeps a minimum against every product and tells you what has dropped below it, so you find out before a customer does rather than after.
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