Reorder Point Calculator
Two questions decide whether inventory helps you or quietly bleeds you: how much to order, and when to place the order. Guess high on the first and your cash sits on a shelf. Guess low and you are paying to place orders you did not need. Guess wrong on the second and you are calling customers to apologize.
This runs the standard answer to both. Everything happens in your browser, and nothing you type is sent anywhere or saved.
Order this many
427 units
42.7 orders a year, about every 9 days
Reorder when you hit
787 units
700 to cover the wait, plus 87 as buffer
Safety stock
87 units
z = 2.05 at 98% service
Yearly cost of this policy
$5,137
$2,133 ordering, $3,004 holding
Average inventory under this policy: 300 units. Annual demand: 18,200 units.
How it decides
Ordering more at once means fewer orders, and each order costs you something real: someone's twenty minutes, a delivery fee, the invoice to process. Ordering more at once also means more stock sitting there, and stock costs you rent, spoilage, and the use of money you could have spent elsewhere. Those two costs move in opposite directions, so there is a quantity where their sum is lowest. That quantity is the economic order quantity, and at exactly that point the two costs are equal, which is a satisfying way to check the arithmetic.
The reorder point answers the other question. You need enough on the shelf to cover demand while you wait for delivery, plus a buffer for the weeks demand runs hot. The buffer scales with the square root of lead time rather than lead time itself, which surprises people. Doubling your lead time does not double the buffer you need; it multiplies it by about 1.4. Variance adds up across weeks, and the standard deviation is its square root.
Service level is the dial worth playing with. Going from 95% to 99% looks like a small promotion on paper and costs you roughly 40% more safety stock. Whether that trade is worth it depends on what a stockout actually does to you, which is a judgment call about your customers, not a formula.
What it will not tell you
The model assumes demand wobbles around a steady average, which is a poor fit for a ski shop in January or a rental company in July. If your demand has a season rather than a spread, run this separately for each stretch of the year instead of averaging across all of it. It also assumes your supplier's lead time holds. If the real variability in your business is the supplier rather than your customers, that is the number to fix first, and no order quantity will paper over it.
The carrying cost field is where most people wave their hands. If you have never worked it out, 20% to 30% of unit cost is the usual starting guess, but the true figure depends on what your money would otherwise be doing. For a business with a line of credit at 11%, holding stock is not a neutral act.
The part the math misses
Plenty of owners run their own ordering because it feels like being careful with money. It rarely is. If you are the highest-billing person in the building, the hour you spend counting boxes is the most expensive hour in the schedule, and it never shows up as a cost anywhere because nobody invoices you for it. That is a different calculation than the one above, and usually a more consequential one.
If that sounds like your operation, that is the kind of thing worth a conversation.