What safety stock and a reorder point do
Stock runs out when demand during the wait for a delivery is larger than what you have left. A reorder point tells you when to place the next order: as soon as the stock you can count on falls to that level. It covers the demand you expect during the lead time, plus a safety stock buffer for demand that turns out higher than average. This calculator handles one product with a fixed lead time, measured in days.
Manual buffer or statistical safety stock
If you already hold a buffer you are comfortable with, choose enter my own and type it in. Otherwise choose from demand variability: give the standard deviation of daily demand and a cycle service level, and the calculator sizes the buffer with the normal approximation used in standard inventory texts; Peter King's APICS article on safety stock walks through the same method and its assumptions. The z-value comes from the inverse of the normal distribution; the normal distribution calculator shows where it comes from.
Use daily data, consistently
Every input is per day: average daily demand, the standard deviation of daily demand and the lead time in days. If your data is weekly, convert it first: divide weekly demand by the number of selling days, and divide a weekly standard deviation by the square root of those days, assuming days are independent. Mixing weeks and days is the most common source of wrong safety stock.
The equations
- Lead-time demand = d × L, with d the average daily demand and L the lead time in days.
- Statistical safety stock SS = z × σ × √L, with σ the standard deviation of daily demand and z = Φ−1(cycle service level).
- Reorder point = d × L + SS, rounded up to whole units. The rounding uses the unrounded safety stock.
- Inventory position = on hand + on order − backorders. At or below the reorder point means it is time to reorder.
Safety stock grows with the square root of lead time: in the example below, a 28-day lead time instead of 7 doubles the buffer from 21.76 to 43.52 units, while lead-time demand quadruples. Raising the cycle service level from 95% to 99% raises the buffer to 30.77 units.
Worked example
A product sells on average 20 units a day with a daily standard deviation of 5, and the supplier delivers 7 days after an order. Lead-time demand is 20 × 7 = 140 units. At a 95% cycle service level, z = 1.644854, so safety stock = 1.645 × 5 × √7 = 21.76 units. The raw reorder point is 161.76, rounded up to 162 units. With 100 on hand, 50 on order and 10 units already promised to customers on backorder, the inventory position is 140: at or below the reorder point. If the order on the way were 100 units instead, the position would be 190, above the trigger. With a manual buffer of 30 units instead, the reorder point is 170.
Why inventory position, not stock on hand
Comparing only the stock on the shelf with the reorder point leads to double orders: units already ordered will arrive, and units owed to customers will leave. Inventory position counts each expected incoming unit once and subtracts unfilled backorders, so it can even be negative. The calculator compares that position with the reorder point and reports the status. It does not recommend how much to order; that depends on order costs, minimums and storage, and is a separate decision.
Limits of the model
The statistical branch assumes a fixed lead time and roughly normal, independent daily demand. It fits poorly for slow or intermittent sellers, highly skewed or seasonal demand, and products whose sales are correlated from day to day, especially when average demand is near zero. Variable supplier lead times would need a larger buffer than shown. The demand figures are yours and are not calibrated by the calculator. For the product economics around stock, see the break-even calculator for how many units you need to sell, and the margin and markup calculator for the price you sell them at. If you ship the product, the dimensional weight calculator estimates billable package weight.
FAQ
What is a reorder point?
The inventory position at which you place a new order: expected demand during the lead time plus safety stock, in whole units.
Should stock on order and backorders count?
Yes. Inventory position adds stock already on order and subtracts backorders, so orders in transit are not duplicated.
Is the cycle service level the same as the fill rate?
No. Cycle service level is the share of replenishment cycles without a stockout. Fill rate is the share of demand served from stock, a different measure.
Can I use weeks instead of days?
Convert to days first, consistently for demand, its standard deviation and the lead time. All inputs here are daily.
What if my lead time varies?
This version assumes a fixed lead time. Variable lead times need a larger buffer; use the manual mode with your own buffer meanwhile.
Does it tell me how much to order?
No. It tells you when to reorder. Order quantity depends on costs, supplier minimums and storage, and is not calculated here.