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Reorder Point (ROP) Calculator

Determine exactly when to reorder stock to avoid stockouts and overstocking.

Inventory Variables

How many units of this product do you sell on an average day?
How many days does it take for a new order to arrive from your supplier?
Extra stock kept for emergencies (e.g., supplier delays or sudden demand spikes).

Your Ideal Reorder Point

900

Units

When your inventory level drops to 900 units, it is time to place a new order!

Lead Time Demand

700

(Sales while waiting)
Safety Buffer

200

(Emergency Stock)

What is a Reorder Point (ROP)?

The Reorder Point (ROP) is the specific level of inventory that triggers an action to replenish that particular inventory stock. It is a minimum amount of an item which a firm holds in stock, such that, when stock falls to this amount, the item must be reordered.

Calculating the Reorder Point ensures that your business does not run out of stock while waiting for a supplier's delivery (lead time demand), nor do you tie up too much capital in excess inventory.

The Reorder Point Formula

ROP = (Average Daily Sales × Lead Time in Days) + Safety Stock
Key Terms
  • Lead Time Demand: The number of products you will sell during the time it takes for your supplier to deliver your new order.
  • Lead Time: The exact number of days between placing an order with a vendor and receiving it in your warehouse.
  • Safety Stock: Buffer inventory kept on hand in case there is a sudden spike in demand or a delay from your supplier.

Frequently Asked Questions

The Reorder Point is the inventory level at which you should place a new order to replenish stock before it runs out. ROP = (Average Daily Usage × Lead Time) + Safety Stock. It prevents stockouts while minimizing excess inventory.
Safety stock is extra inventory kept as a buffer against demand variability and supply delays. Without it, any spike in demand or supplier delay during lead time would cause a stockout. Typical safety stock = (Max Daily Usage - Avg Daily Usage) × Max Lead Time.
Lead time is the total time from placing an order to receiving goods. It includes: supplier processing time, manufacturing/preparation time, shipping/transit time, and receiving/inspection time. Track actual lead times over several orders for accuracy.
EOQ is the optimal order quantity that minimizes total inventory costs (ordering + holding). EOQ = √(2 × Annual Demand × Order Cost / Holding Cost per Unit). Use EOQ with ROP for efficient inventory management.
Recalculate ROP monthly or quarterly, or whenever there's a significant change in demand patterns, lead time, or supplier reliability. Seasonal businesses should adjust ROP ahead of peak and off-peak seasons.