Every stockout has a cost you can see, the orders you could not take, and one you cannot, the customers who went elsewhere and did not come back. Overstock has a cost too: cash tied up in units that sit on a shelf. The reorder point is the stock level that balances the two, and with a sensible safety buffer it is one of the most useful numbers a product business can track.
This guide explains the reorder point formula used by the free ORVX Inventory Reorder Calculator, with a worked example, the mistakes to avoid and what the formula cannot see.
Every example and amount on this page is illustrative. It shows the method and is not a benchmark, a quote or advice.
The two formulas
Reorder point = daily sales x lead time + safety stock
Order quantity = daily sales x (lead time + days of cover) + safety stock - stock on hand - stock on order
Safety stock is daily sales multiplied by the number of safety days you choose. The calculator also shows how many days your current stock will last, and answers the practical question directly: reorder now, or not yet.
The inputs
- Average units sold per day: units sold over a recent period divided by the days in it. Use a period without stockouts, or the average will be too low.
- Supplier lead time: days from placing an order to having stock you can sell, including transit and receiving.
- Safety days: extra days of sales to hold as a buffer.
- Units in stock and units on order.
- Days of stock to order for: how long the new order should last after it arrives. The calculator uses 30 if you leave it empty.
Worked example
As an illustration only, suppose a product sells 14 units a day. The supplier takes 21 days, the store holds 7 days of safety stock, there are 320 units in stock and none on order, and each order should cover 30 days.
| Result | Value |
|---|---|
| Demand during lead time (14 x 21) | 294 units |
| Safety stock (14 x 7) | 98 units |
| Reorder point (294 + 98) | 392 units |
| Days of stock left (320 / 14) | 22.86 days |
| Suggested order quantity | 492 units |
| Reorder now? | Yes |
In this example stock is 320 units, below the reorder point of 392, so the answer is to reorder now. The order quantity is 14 x (21 + 30) + 98 - 320 = 714 + 98 - 320 = 492 units.
With 500 units in stock instead, the same product has 35.71 days of stock, which is above the reorder point, so the answer becomes "not yet". If the store still ordered today, the suggested quantity would fall to 312 units, because more of the cover is already on the shelf.
How to use it
- Start with your best sellers. A stockout on a top product costs far more than one on a slow item.
- Measure lead time from your own purchase orders, using the slower deliveries rather than the fastest.
- Set safety days from experience: how late have deliveries been, and how much did sales jump in your busiest week?
- Check the result weekly, or whenever daily sales change noticeably.
- Look at days of stock left next to the lead time. If stock will last fewer days than delivery takes, you are already at risk of running out.
Pricing affects how fast stock moves, and the Product Pricing Calculator shows the price your costs require. For the wider picture of stock velocity and dead stock, read Ecommerce Inventory Analytics.
Common mistakes
- Averaging sales over a stockout. Days with zero stock record zero sales, which drags the average down and makes the next stockout more likely.
- Using the quoted lead time. The supplier's quote rarely includes customs, transit delays and receiving.
- Forgetting stock on order. It leads to double orders and excess stock.
- No safety stock at all. Any delay then becomes a stockout.
- Too much safety stock. Every extra day of buffer is cash that is not available for anything else.
When lead times vary
Lead time is rarely the same twice. If one supplier delivers anywhere between three and five weeks, plan with the longer figure, or keep the shorter one and add the difference to your safety days. Both give the same protection; the second keeps the buffer visible as a separate number you can review when deliveries become more reliable.
Limits of the formula
It assumes steady daily demand and a fixed lead time. It does not model seasonality, promotions, minimum order quantities, volume discounts or the cash you have available. It looks at one product at a time and has no view of the rest of the catalog. The calculator runs in your browser and stores nothing.
A healthy storefront matters as much as healthy stock levels. The Shopify Store Health Checker audits the public side of a store.
Across the whole catalog
A reorder point for one product is a start. ORVX Core reads stock on hand and the money held in it, product by product, from your Shopify store, alongside sales and profit, so you can see where cash is sitting.
The $1.9M Commerce Initiative gives 10,000 eligible Shopify stores 12 months of ORVX Core free, with no credit card. Afterwards Core is the standard $19 per month or $190 per year, only with your approval. More free tools are in the ORVX tools hub.
Frequently asked questions
What is a reorder point?
The stock level at which you should place a new order so that it arrives before you run out. It covers the demand during the supplier's lead time, plus a safety buffer.
How many days of safety stock should I hold?
Enough to cover the delays and demand spikes you have actually seen. Look at how late past deliveries were and how much sales jumped in busy weeks, and hold that many days of sales.
Why does the calculator subtract stock on order?
Units already ordered will arrive and count toward your cover. Ignoring them leads to ordering the same units twice.
Does this work for seasonal products?
Only with care. The formula uses one average daily sales figure. For seasonal items, use the expected daily sales for the weeks the new stock will cover, not last month's.
Is anything stored?
No. The calculation runs in your browser.
Sources
- The $1.9M Commerce Initiative: terms and FAQ (ORVX, checked 26 October 2026)