Reorder point
A reorder point is the stock level at which a new purchase order must be placed so that replenishment arrives before stock runs out. It is calculated as average daily unit sales multiplied by supplier lead time in days, plus safety stock. Ecommerce operators use it to turn demand forecasts into a concrete reorder trigger.
| Average daily unit sales | Per-SKU trailing average or forecast rate, in units |
| Lead time in days | Days from placing the purchase order to sellable receipt: production, freight and receiving |
| Safety stock | Buffer units held against demand spikes and late deliveries |
Worked example
A single SKU with a $30 landed cost and a 30-day supplier lead time (example numbers).
At 12 units a day the SKU crosses its 450-unit trigger in about six days, so the purchase order is due this week. How many units to order is a separate decision - the reorder point only says when.
What is a good reorder point?
A reorder point is a trigger, not a benchmark, so there is no number to aim for - the quality question is whether the safety stock inside it is calibrated. That depends on your demand volatility (how far a bad week deviates from the average), your lead-time reliability (how late a shipment can run), the service level you want to hold, and your margin structure: a stockout on a high-margin A item costs far more than holding its buffer, while a thin-margin C item rarely earns deep insurance. Recompute per SKU from your own sales history rather than borrowing a rule of thumb.
Reorder point vs related metrics
| Metric | What it measures | How it differs |
|---|---|---|
| Days of cover | How long current stock lasts at the current sales rate | The same decision expressed in days instead of units. Cover is the runway; the reorder point is the tripwire on it. |
| Stockout | Demand arriving with no stock to serve it | What the reorder point exists to prevent. A trigger set below lead-time demand schedules a stockout. |
| Open-to-buy | The inventory budget available to spend in a period | A dollar-level plan across the range. The reorder point is a unit-level trigger for one SKU inside that plan. |
| Demand forecasting | Predicting the future sales rate | Supplies the daily-rate input. A better forecast moves the trigger before the trailing average catches up. |
Common mistakes
- Setting it once and never recomputing. Velocity moves. A reorder point built on last quarter's sales rate is wrong today - recompute on a regular cadence.
- Buffering only for demand noise. Late shipments are usually the bigger risk. Safety stock has to cover lead-time slip as well as demand spikes.
- Measuring against on-hand stock alone. Compare the trigger with on-hand plus on-order units, or every open purchase order gets double-ordered.
- One service level for the whole catalogue. Buffer A items deeper than C items - the cost of a stockout and the cost of holding are not symmetric across SKUs.
- A trigger without a quantity. The reorder point says when to order. How much is its own decision, sized by the open-to-buy plan and order economics.
Frequently asked questions
In Blufire, S7 Inventory keeps days-of-cover and reorder triggers current per SKU on the ABC x XYZ grid, recomputed from your own reconciled sales rate instead of a static spreadsheet.
Updated July 2026