# Reorder Point Formula: Never Run Out of Stock Again

> The reorder point tells you exactly when to place a new order. Here's the formula, how lead time and safety stock fit in, and a worked example.

- URL: https://www.pyalm.com/blog/reorder-point-formula
- Author: Fadhil Abdulla
- Category: Free Tools
- Published: 2026-06-19
- Updated: 2026-06-19

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## What a reorder point is

The reorder point is the stock level that should trigger a new purchase order — low enough to avoid overstocking, high enough that you don't run out before the next delivery arrives. The free [Reorder Point Calculator](https://www.pyalm.com/free-tools/reorder-point-calculator) works it out instantly.

## The formula

Reorder point = (average daily usage × lead time in days) + safety stock.

If you sell 40 units a day, your supplier takes 7 days to deliver, and you keep 50 units of safety stock, your reorder point is (40 × 7) + 50 = 330 units. When stock hits 330, you order.

## Lead-time demand

Lead-time demand — usage multiplied by lead time — is the stock you'll consume while waiting for the order. Underestimate it and you stock out; overestimate and you tie up cash.

## Safety stock

Safety stock is a buffer for demand spikes and supplier delays. More variability means you need more buffer. Set it deliberately rather than guessing.

Pair this with the [Inventory Turnover Calculator](https://www.pyalm.com/free-tools/inventory-turnover-calculator) to keep stock lean and available.

[Use the free Reorder Point Calculator](https://www.pyalm.com/free-tools/reorder-point-calculator) | [Inventory Turnover Calculator](https://www.pyalm.com/free-tools/inventory-turnover-calculator)