1. Find your average daily sales for the item
Add up the units sold in the last 30 days and divide by 30. A pet-supply shop sells 360 bags of one food in 30 days: 12 a day.
2. Find the lead time
The days from placing an order to having it on the shelf, including processing and shipping. Use the longer end if it varies. The supplier takes 7 days.
3. Work out the demand during the wait
Daily sales × lead time: 12 × 7 = 84 bags will sell before the order arrives.
4. Add a safety cushion
Safety stock covers a busy stretch or a late delivery. A simple version is a few days of sales: 12 × 3 days = 36 bags. More cushion means fewer stockouts and more cash on the shelf.
5. Add them for the reorder point
84 + 36 = 120 bags. When stock falls to 120, place the order. This is the standard form of the formula: reorder point equals the demand expected during the lead time plus safety stock.
6. Decide how much to order
Pick how many days of sales each order should cover. Two weeks: 12 × 14 = 168 bags. At $4.50 each, an order costs $756. Check that against your cash before you commit, and against any supplier minimum.
7. Know when you will hit it
With 150 bags on hand: (150 − 120) ÷ 12 = 2.5 days until it is time to order.
In a spreadsheet
B1: Units per day (12) B2: Lead time days (7) B3: Safety days (3)
B4: Lead-time demand: =B1*B2
B5: Safety stock: =B1*B3
B6: Reorder point: =B4+B5
B7: Days to cover per order (14) B8: Order quantity: =B1*B7
B9: On hand (150) B10: Days until reorder: =(B9-B6)/B1
What to do with the answer
Do the fast sellers first; they are where a stockout costs the most. Recalculate when sales or delivery times change, and at the start of each season. If an item rarely sells, the answer may be to stock less of it, not to calculate a reorder point.
Planning estimate. Seasonal demand, supplier minimums and volume discounts change the right answer for your shop.
Published by Groundwork Business Advisory. Updated October 24, 2026.