Reorder Point Calculator
Know exactly when to reorder — and how much — so you stop stocking out without drowning in stock.
Written by Dorothy Ibrahim, 10+ years in banking & finance
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How we calculate this
This calculator answers two different inventory questions that are often confused: WHEN to reorder (the reorder point — the stock level that should trigger a purchase order) and HOW MUCH to order each time (the economic order quantity). The reorder point covers the demand you expect during the supplier lead time plus a safety-stock buffer sized to your chosen service level; EOQ balances ordering costs against holding costs.
The formulas
- Demand during lead time
- average daily demand × lead time in days
- Safety stock (service-level method)
- z × daily demand standard deviation × √lead timez is a statistical constant for the service level: 90% → 1.28, 95% → 1.65, 99% → 2.33. Or enter a manual safety-stock quantity.
- Reorder point (ROP)
- demand during lead time + safety stock
- Economic order quantity (EOQ)
- √(2 × annual demand × cost per order ÷ holding cost per unit per year)Requires a holding cost above zero — estimate it with the Inventory Carrying Cost tool.
- Order cadence
- orders per year = annual demand ÷ EOQ; days between orders = 365 ÷ orders per year
Worked example
- Say you sell 12 units a day on average, your supplier lead time is 14 days, daily demand swings with a standard deviation of 4 units, and you want a 95% service level (z = 1.65).
- Demand during lead time = 12 × 14 = 168 units.
- Safety stock = 1.65 × 4 × √14 = 1.65 × 4 × 3.74 ≈ 25 units.
- Reorder point = 168 + 25 ≈ 193 units — when stock hits 193, place the order.
- For order size: with 4,380 units of annual demand, a $40 cost per order, and a $3 holding cost per unit per year, EOQ = √(2 × 4,380 × $40 ÷ $3) = √116,800 ≈ 342 units.
- That works out to about 12.8 orders per year — one roughly every 28 days.
Rates, benchmarks & sources
- Reorder point = lead-time demand + safety stock; EOQ = √(2DS/H) — textbook operations formulas, not thresholds — Standard inventory-management formulas (ROP and Wilson EOQ)
- Service levels 90% / 95% / 99% correspond to z = 1.28 / 1.65 / 2.33 — Statistical constants (one-sided normal z-scores)
Figures current as of 2026-07-02. See our methodology & editorial standards for how constants are versioned and verified.
What this tool doesn’t model
- The safety-stock formula assumes daily demand is roughly normally distributed and independent day to day — lumpy B2B demand or viral spikes break that assumption.
- Treats lead time as fixed; if your supplier’s lead time itself varies, real safety stock needs to cover that variability too, and this tool will understate it.
- EOQ assumes steady demand and a fixed cost per order — it ignores quantity discounts, minimum order quantities, and container or pallet rounding.
- A 95% service level still means roughly 1 stockout in 20 reorder cycles by design; pick 99% for A-items where a stockout costs sales and marketplace ranking.
- Does not model perishability, seasonality, or multi-location stock.
Frequently asked questions
What is the difference between the reorder point and EOQ?
They answer different questions. The reorder point (ROP) is WHEN to order — the stock level that should trigger a new purchase order so you do not run out while waiting for delivery. EOQ is HOW MUCH to order each time — the quantity that balances the fixed cost of placing orders against the cost of holding the resulting stock. You need both: ROP sets the trigger, EOQ sets the size.
What service level should I choose?
The service level is the share of reorder cycles you get through without a stockout: 90% (z = 1.28) accepts a stockout about 1 cycle in 10 with the smallest buffer, 95% (z = 1.65) is the common default, and 99% (z = 2.33) is near-zero stockouts with the biggest buffer. Higher service levels cost more in carrying cost, so many businesses use 99% only for their best-selling items and 90–95% for the long tail.
How do I find my daily demand standard deviation?
Export your last 60–90 days of unit sales for the item, take the standard deviation of the daily quantities (a spreadsheet STDEV function does it), and use that number. If demand is perfectly steady the standard deviation is 0 and the formula correctly gives zero safety stock — the buffer exists only to absorb variability.
Why does stocking out matter more on marketplaces?
A stockout costs you more than the missed sales: on marketplaces like Amazon, going out of stock can also hurt your search ranking and buy-box position, and the ranking loss persists after you restock. That asymmetry is why sellers often run a higher service level on marketplace items than the pure carrying-cost math would suggest.
What do I use for holding cost per unit in the EOQ formula?
Multiply the unit’s inventory value by your annual carrying rate — the Inventory Carrying Cost tool computes that rate from your storage, capital, insurance, and shrinkage numbers (typically 20–30% per year as a rule of thumb). For example, a $12 unit at a 25% carrying rate costs about $3 per unit per year to hold, which is the default used here.
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themoneysheet provides educational estimates, not financial, tax, or legal advice. Figures use published rates and formulas current as of the date shown, but your situation may differ. Consult a qualified professional (CPA, attorney, or licensed advisor) before making financial decisions.