Reorder point calculator: when to reorder and how much

The reorder point calculator tells you the stock level at which to place your next order, so new stock arrives before the shelf is empty. All figures are in units, such as pieces, packets or kilograms, and results are rounded up to whole units.

The reorder level is the stock you will sell while you wait for the delivery, plus a cushion. If you sell 20 units a day and the supplier takes 5 days, you sell 100 units while waiting. Add safety stock for the days that go wrong, and the total is your reorder level.

Safety stock covers two risks: selling faster than usual and the supplier arriving late. Days of cover is the simple way: decide how many extra days of sales you want on hand. From your worst case works it out from your own history: the stock your busiest day would need over your slowest delivery, minus what a normal day over a normal delivery needs.

The order quantity is a separate decision. The reorder level tells you when to order; the order quantity tells you how much. Ordering for more days means fewer orders but more money tied up in stock.

A kirana store, by days of cover. The store sells an average of 18 one-litre pouches of cooking oil a day. The distributor delivers 4 days after the order, and the owner wants 3 days of safety stock. Safety stock is 3 × 18 = 54 pouches, and the reorder level is 18 × 4 + 54 = 126 pouches. An order for 15 days is 18 × 15 = 270 pouches, which rounds up to 23 cartons of 12, or 276 pouches.

A masala maker, from the worst case. The unit uses 40 kg of red chilli on an average day and up to 65 kg on the busiest days before Diwali. The supplier usually delivers in 6 days but has taken 10. Safety stock is 65 × 10 − 40 × 6 = 650 − 240 = 410 kg, and the reorder level is 40 × 6 + 410 = 650 kg. An order for 21 days is 840 kg, or 34 sacks of 25 kg.

With this method the reorder level always equals your busiest day times your slowest delivery. It is safe, but it can tie up a lot of stock, so keep it for items you cannot afford to run out of.

Festival season. If the kirana's oil sales rise to 30 pouches a day in festival weeks, the same 4-day lead time and 3 days of cover give a reorder level of 30 × 4 + 90 = 210 pouches. Recalculate before the season starts, not after the first empty shelf.

A reorder level is only as good as the numbers behind it. Watch for these.

A reorder level only helps if someone checks stock against it every day. With a few hundred products, several suppliers and stock arriving and leaving all day, a spreadsheet is out of date by lunchtime.

managemate does not work out the reorder level for you; you enter it, and this calculator is a good way to choose it. In each product's Restocking panel, set Reorder at, Order quantity and Usual supplier. The reorder list then shows every product whose available stock, not counting expired lots, plus what is already on order has fallen to that level. It suggests reorder level + order quantity − available − on order, rounded up to whole units of the product's stock unit, and creates one draft purchase order per supplier for you to check. Today's plan on the dashboard shows how many products need restocking, and the location switcher shows one shop's or godown's reorders at a time.