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The reorder point formula, worked through
Your reorder point is the stock level where you place the next order. Above it you are fine. Below it you are betting on your supplier being fast. The sum itself is easy. Being honest about the numbers you put into it is the hard part.
By Fazeel Tanveer, Founder · Last reviewed 20 August 2026
Reorder point = lead time demand + safety stock
Lead time demand is the units you sell per day times the days it takes to restock. Safety stock is your cover for the weeks both of those turn out worse than usual.
On this page
Step 1: how much you sell while you wait
Lead time demand is simply how many units you will sell while you wait for the order to turn up.
Average units sold per day × days to restock.
Sell 8 a day with a 21 day restock and you will sell 168 units before the new stock lands. That is how much you need to still have on the shelf the day you place the order.
Step 2: the lead time most merchants get wrong
This is where the sum usually breaks. Merchants use the production time their supplier quoted and forget everything that happens around it.
The real lead time is the whole stretch from start to finish:
- Spotting that you need to order, plus your own sign off
- Your supplier making or picking the goods
- Shipping, plus customs if you import
- Unloading, counting and booking it into Shopify
A supplier who quotes two weeks routinely turns into five or six once you count all of that. Build your reorder point on the two and it is about a third of what it should be.
Measure it, do not guess it. Look at your last three orders of a product. Write down the date you decided to order and the date you could actually sell it. Use the slowest of the three, not the average. The reorder point exists to survive the bad month.
Step 3: safety stock for when things go wrong
The sum so far assumes an average month. Safety stock covers the months that are not average: a sudden run on the product, a supplier running late, a shipment stuck in customs.
A quarter to a half of the units you sell during a restock is a good starting point, more for anything unpredictable. The full version, which uses how much your sales swing and how often you are willing to run out, is in the safety stock formula.
The whole thing worked through
Take a product that sells steadily:
- Sells: 8 units a day
- Real time to restock: 21 days
- Units sold while you wait: 8 × 21 = 168
- Safety stock at a third: 56
- Reorder point: 224 units
So you order when stock hits 224. That looks like far too much stock to be reordering at, which is exactly why stores that pick round numbers run out. The number is big because the wait is long.
Using it across your whole catalog
Doing this by hand for every SKU is not realistic. It does not need to be.
- Do the sum properly for the products that hurt. Your top sellers and anything imported that takes weeks to arrive.
- Group everything else by roughly how fast it sells and how long it takes to restock. Three or four groups, one number each.
- Set your alert threshold to the same number. They are the same thing. One is the level. The other is being told you hit it.
- Fix it from what actually happens. Ran out even though the alert fired? Raise it. Alerted for a month with nothing happening? Lower it.
To be clear about what we do. Stockwell does not work out reorder points and it does not raise purchase orders. It watches your stock and tells you when you hit the number you chose. The sums above are yours, or your inventory system's.
Being told you reached the number
Once you have a reorder point, something still has to spot the moment you cross it. Stockwell keeps that number for every SKU (variant) then emails your team or posts to Slack when stock drops past it, at every location.
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Common questions
What is the reorder point formula?
Reorder point equals lead time demand plus safety stock. Lead time demand is the units you sell per day times the days it takes to restock. Selling 8 a day with a 21 day wait and a 56 unit buffer gives a reorder point of 224.
Is the reorder point the same as a low stock threshold?
In practice, yes. The reorder point is the level where you order. The low stock threshold is the level where something tells you to. Set them to the same value so the email arrives exactly when you need to act.
Why is my reorder point so high?
Almost always because your restock takes a long time. The sum multiplies daily sales by restock days, so a six week wait gives you a big number. That is correct. If it still looks wrong, check you used the real end to end time rather than the production time your supplier quoted.