Your reorder point is the stock level at which you need to place a new order so that fresh stock arrives before you run out. Get it right and you stop guessing. Get it wrong and you either run out during your best week or tie up cash in boxes you didn’t need yet.
This guide covers the formula, works through ecommerce examples step by step, and explains the details that trip up online sellers: what really counts as lead time, how Amazon FBA changes the sums, and why stockout days quietly ruin your numbers.
The reorder point formula
The standard formula is:
Reorder point = (average daily demand × lead time in days) + safety stock
- Average daily demand is how many units you expect to sell per day during the lead time. Ideally this is a forecast, not just last month’s average.
- Lead time is the number of days from deciding to order to the stock being available to sell.
- Safety stock is the extra buffer you hold to cover demand that’s higher than expected or deliveries that arrive late. Our safety stock guide covers how to calculate it.
When the stock you have available plus stock already on order falls to or below the reorder point, it’s time to order.
That second part matters. If you have 200 units on a confirmed purchase order arriving next week, they count. Otherwise you’ll order twice.
Worked example 1: a steady seller
You sell a bamboo chopping board through your Shopify store and on eBay, all shipped from one warehouse.
- Sales over the last 60 days: 540 units → 9 units per day
- Supplier lead time: 10 days manufacturing + 21 days sea freight + 4 days customs + 2 days receiving = 37 days
- Safety stock (calculated separately): 60 units
Reorder point = (9 × 37) + 60 = 333 + 60 = 393 units
So when available stock plus open POs drops to 393, you place the next order.
How much to order
The reorder point tells you when. The order quantity tells you how much. A simple approach is to order enough to cover the lead time plus a target number of days of cover after the stock arrives:
Order quantity = demand × (lead time + target days of cover) + safety stock − available − on order
With 60 days of target cover and 393 units available, nothing on order:
9 × (37 + 60) + 60 − 393 − 0 = 873 + 60 − 393 = 540 units
Then round up to your supplier’s minimum order quantity (MOQ) and case pack. If they pack 24 per carton, 540 becomes 552 (23 cartons).
Worked example 2: a growing product
Averages look backwards. If a product is growing, a 60-day average underestimates what you’ll sell during the next lead time.
Say a phone case sold 4 per day two months ago and 8 per day last month. The 60-day average is 6, but the recent trend points to roughly 10 per day over the next five weeks.
- Lead time: 21 days
- Safety stock: 40 units
Using the average: (6 × 21) + 40 = 166 Using the trend forecast: (10 × 21) + 40 = 250
Using the average, you’d reorder 84 units too late and probably run out. This is why the “average daily demand” in the formula should come from a forecast that reflects trend and seasonality. OmniRestock’s demand forecasting tests several methods against each product’s own history and uses the one with the lowest recent error.
What counts as lead time
Most sellers underestimate lead time because they only count the supplier’s quoted production time. For reorder point purposes, lead time is everything between “we decide to order” and “units are available to sell”:
| Stage | Typical things to include |
|---|---|
| Order processing | Getting the PO approved, supplier confirming, deposit paid |
| Manufacturing | Supplier’s production time |
| Shipping | Sea, air or road transit, including port waiting |
| Customs clearance | Paperwork, inspections, duty payment |
| Receiving | Unloading, counting and putting away at your warehouse or 3PL |
Write these down separately. When one part changes, for example when switching from sea to air, you can update just that part rather than guessing a new total.
Use realistic, not best-case, lead times
If your supplier says “30 days” but the last four orders took 34, 38, 31 and 41 days, use something nearer the real figure. Your safety stock can then cover the remaining variation.
Lead time for Amazon FBA
If you sell through Fulfilment by Amazon, FBA is effectively a separate warehouse. Stock in your own warehouse or 3PL isn’t sellable on Amazon until it has been sent in and received.
That means you have two reorder points:
- FBA transfer point: when to send stock from your warehouse to Amazon. Lead time = prep + carrier transit + Amazon receiving. Many sellers allow around two weeks, but use your own recent inbound history.
- Supplier reorder point: when to order from the supplier into your warehouse. Here, the demand includes the stock you plan to move into FBA.
The common mistake is counting Amazon demand twice: once as an FBA forecast and again inside the supplier order. Planned transfers into FBA should count as demand on the source warehouse, and the FBA forecast should not be added on top. Our guide to FBA replenishment from your own warehouse explains this in detail.
Worked example 3: FBA transfer point
- Amazon sales: 15 units per day
- Prep + inbound + receiving: 14 days
- FBA safety stock: 45 units
FBA transfer point = (15 × 14) + 45 = 255 units in FBA (including units already in transit to Amazon).
Amazon also applies FBA capacity limits, so the quantity you can send may be capped. See our explainer on FBA restock and capacity limits.
Exclude stockout days from your demand
This is the most common hidden error in reorder point sums.
If you were out of stock for 10 days last month, you sold nothing on those days because you couldn’t, not because nobody wanted the product. Include those zero days and your average falls, your reorder point falls, and you run out again. It becomes a cycle.
Worked example 4: the stockout trap
In the last 30 days you sold 200 units, but you were out of stock for 10 of those days.
- Including stockout days: 200 ÷ 30 = 6.7 per day
- Excluding stockout days: 200 ÷ 20 = 10 per day
With a 20-day lead time and 50 units of safety stock:
- Wrong: (6.7 × 20) + 50 = 184
- Right: (10 × 20) + 50 = 250
That’s a 66-unit difference on a single product. Even 10 per day may understate demand, because customers who found you out of stock may have bought elsewhere. Still, excluding the days is a big improvement.
OmniRestock excludes out-of-stock days automatically and caps one-off spikes (by default anything over four times the median day), so a single viral order doesn’t inflate the reorder point either.
Reorder point across several channels
If you sell the same product on Shopify, Amazon, eBay and TikTok Shop from one warehouse, the reorder point for that warehouse needs combined demand from every channel that it fulfils.
Two things to watch:
- Same product, different SKUs. An Amazon listing called
BRD-01-AMZand a Shopify variant calledBOARD-BAMBOOare the same product. Link them so their sales add up. - Multipacks. If Amazon sells a 2-pack, each Amazon sale uses two units.
Our guide to multichannel inventory management explains how to set this up without double counting.
Reorder point in a spreadsheet
For a small catalogue, a spreadsheet works. Columns to include:
| Column | Formula idea |
|---|---|
| Units sold (in-stock days only) | From your order export |
| In-stock days | Count of days with stock > 0 |
| Daily demand | Units ÷ in-stock days |
| Lead time days | Sum of lead time parts |
| Safety stock | See the safety stock guide |
| Reorder point | =Daily demand * Lead time + Safety stock |
| Available + on order | From stock report and open POs |
| Reorder now? | =IF(Available+OnOrder<=ReorderPoint,"ORDER","OK") |
Our free inventory forecasting spreadsheet template has these columns ready to use. The limits show up once you have hundreds of SKUs, several channels and changing lead times, because every number needs manual refreshing.
How often to recalculate
Recalculate whenever an input changes: demand shifts, a supplier changes lead time, or a new channel launches. In practice, sellers using spreadsheets often do it weekly or monthly. Software can do it daily. OmniRestock recalculates stockout and order-by dates every day, and immediately whenever a purchase order’s arrival date changes.
Frequently asked questions
What is the difference between reorder point and reorder quantity?
The reorder point is the stock level that triggers an order. The reorder quantity is how much you order once that point is reached. You need both.
Should I include stock on order in the comparison?
Yes. Compare available stock plus open purchase orders that have been sent or confirmed against the reorder point. Leave draft POs out because they aren’t real commitments yet.
What if my supplier has a minimum order quantity?
Calculate the quantity you need, then round up to the MOQ and case pack. If the MOQ is much larger than what you need, consider whether the extra cash tied up is worth it, or negotiate.
Is reorder point the same as “order-by date”?
They’re related. The reorder point is a quantity; the order-by date is when you’ll hit it based on your forecast. OmniRestock shows both, along with the expected stockout date.
Does the formula work for slow sellers?
For products that sell a few units at irregular intervals, a simple average can mislead. Methods designed for intermittent demand, such as Croston’s method, usually do better.
Next steps
- Work out your buffer with the safety stock guide.
- Try the reorder point calculator.
- Or connect your store and get a free stockout report showing what will run out and when, with no card needed. You can then start a 14-day free trial with your data already loaded.