Free Tool
Free Reorder Point Calculator
Calculate the exact stock level at which you should place your next order. Accounts for lead time, safety stock and demand variability. No signup required.
What is a reorder point?
A reorder point (ROP) is the stock level that triggers a new purchase order, calculated so that stock arrives before you run out. It combines your lead time demand with a safety buffer for uncertainty. For brands sourcing overseas with long lead times, getting this right is the difference between smooth replenishment and a long stockout.
Enter your details
Your average units sold per day. Divide your weekly sales by 7.
Total days from placing an order to stock arriving in your warehouse. The default of 70 days is an example for overseas production and freight.
Extra days of cover to hold as a buffer. Used alongside the statistical safety stock below.
How much your daily sales fluctuate around the average. Seasonal items usually vary more than steady sellers.
The probability of not running out during a replenishment cycle. 95% is a common starting point; use a higher level for your best sellers.
Enter your cost per unit to see the cash value of your inventory investment.
Your planned order quantity. Used to calculate maximum stock level and average inventory.
Enter your average daily sales above to calculate your reorder point.
The formulas explained
Reorder point formula
Reorder point = (average daily sales × lead time in days) + safety stock. It is the minimum stock level that covers you through your entire lead time, plus a safety buffer. When stock falls to this number, your order must be placed immediately. Missing it is a common cause of stockouts: see the common causes of stockouts.
Example (illustrative numbers): you sell 10 units a day, your supplier takes 30 days to deliver and you hold 50 units of safety stock. Reorder point = (10 × 30) + 50 = 350 units. When stock falls to 350 units, place your next order.
Statistical safety stock formula
Where Z is the z-score for your service level (1.65 for 95%), σ_d is the standard deviation of daily demand (daily demand × variability %), and √LT is the square root of your lead time in days. This formula accounts for statistical uncertainty rather than a simple fixed buffer. For worked examples, see the guide to the safety stock formula.
Maximum stock level formula
The maximum stock level defines how much you should ever hold. After receiving an order, your stock should not exceed this level. If it does, your order quantity is too large or your safety stock is set too high.
See a reorder-by date for every SKU
Canopy Inventory is a read-only Shopify app. It uses your lead time, safety stock and target cover settings to show a reorder-by date and a suggested buy quantity for each SKU. It is coming soon to the Shopify App Store.
Reorder point: frequently asked questions
A reorder point (ROP) is the stock level at which you place a new purchase order, so that stock arrives before you run out. It accounts for how long your supplier takes to deliver (lead time) and a safety buffer for unexpected demand or delays. The formula is: ROP = (daily demand × lead time in days) + safety stock. Getting this right matters most for brands with long lead times: a missed reorder point can leave a product out of stock for the whole lead time while you wait for the next delivery.
Safety stock is calculated using the formula: Z × σ_d × √LT, where Z is a z-score based on your target service level (1.65 for 95%), σ_d is the standard deviation of daily demand (daily demand × demand variability %), and LT is your lead time in days. At a 95% service level with 10 units/day demand, 20% variability and 70-day lead time, safety stock = 1.65 × 2 × √70 = 27.6 units.
A 95% service level is a common starting point. It corresponds to a z-score of 1.65. Best sellers may warrant 98% to 99% (z = 2.05 to 2.33). Slower or lower-margin SKUs can use 90% (z = 1.28) to reduce the cash tied up in stock. Choosing your service level is a balance between the cost of carrying safety stock and the cost of a stockout.
Demand variability measures how much your daily sales fluctuate around the average. It is expressed as a percentage: divide the standard deviation of your daily sales by the average daily sales and multiply by 100. For example, if you sell an average of 10 units a day with a standard deviation of 2 units, your variability is 20%. Seasonal products usually vary more than steady sellers.
The reorder point is the trigger: when stock falls to this level, you place an order. The maximum stock level is the ceiling: the most you should hold at any time. Maximum stock = safety stock + order quantity. Holding more than your maximum stock ties up unnecessary cash and warehouse space. Together, these two numbers define your operating inventory band: order at the ROP, receive stock up to the maximum.
Related tools and guides
Know what to reorder, and when
Canopy Inventory shows how many weeks of stock each product has left, when it runs out, and what to reorder.