How to calculate a reorder point (formula + examples)

A reorder point is the stock level that says “order more now.” The formula is reorder point = (average daily sales × lead time in days) + safety stock. The first part covers what you’ll sell while the restock is in transit; safety stock is a buffer for demand spikes and late deliveries. Set it right and a product is reordered while you still have enough to sell through the wait; too low and you stock out, too high and cash sits on the shelf. Below is a worked Shopify example, the main safety-stock methods, and exactly which numbers to pull from your store.

What is the reorder point formula?

Reorder point = (average daily sales × lead time in days) + safety stock. It’s the on-hand level at which you place a purchase order so new stock lands just as you’d otherwise run out. Two parts do the work:

• Average daily sales × lead time — how much you’ll sell while you wait for the restock to arrive. This is the demand the reorder has to cover.
• Safety stock — a buffer for days that sell faster than average, or a supplier that ships late. Without it, “average” demand that runs hot for a week sells you out before the order lands.

Metric	Formula
Reorder point	(average daily sales × lead time in days) + safety stock
Demand during lead time	average daily sales × lead time in days
Safety stock — fixed buffer	average daily sales × buffer days
Safety stock — max method	(max daily sales × max lead time) − (avg daily sales × avg lead time)
Safety stock — service level	Z × std. dev. of daily sales × √(lead time in days)

A worked example

Say a product sells 8 units a day on average, and your supplier takes 12 days from purchase order to sellable stock on the shelf. You want a 5-day buffer of safety stock.

• Demand during lead time: 8 × 12 = 96 units
• Safety stock (fixed buffer): 8 × 5 = 40 units
• Reorder point = 96 + 40 = 136 units

So when on-hand stock drops to 136, you raise a purchase order. At 8 units a day that’s exactly 17 days of cover (136 ÷ 8) — enough to absorb the 12-day lead time with five days of slack.

Run your own numbers in the free reorder point calculator — no signup, no account.

How do you set safety stock?

Three approaches, from simplest to most precise:

• Fixed buffer (start here). Pick the extra days of cover you want and multiply by average daily sales. A 5–7 day buffer is a sensible default for most SKUs.
• Max method. (max daily sales × max lead time) − (average daily sales × average lead time). This sizes the buffer to your worst observed day and your slowest observed delivery, so it tends to run generous.
• Service-level (statistical). Z × standard deviation of daily sales × √(lead time in days). It sizes the buffer to how spiky a product actually is and to the service level you’re targeting, so steady sellers get a thin buffer and erratic ones a deeper one. Z comes from your target service level:

Service level (orders filled from stock)	Z
90%	1.28
95%	1.65
97.5%	1.96
99%	2.33

The statistical method is where most merchants over-buy less. Take the example above: a flat 5-day buffer is 40 units. If that product’s daily sales only swing by a standard deviation of about 3 units, a 95% service-level buffer is 1.65 × 3 × √12 ≈ 17 units — under half the fixed buffer. A steady seller doesn’t need 40 units of insurance; a volatile one might need more than 40. Start with a fixed buffer and move to the statistical one once you have a few months of sales history.

How do you get the inputs from Shopify?

Two of the three inputs live in Shopify; the third has to come from your supplier.

• Average daily sales. Shopify Analytics has an Inventory sold daily by product report that gives average units sold per day per variant, or take units sold over a recent window from your sales reports and divide by the days. Pick a window that reflects current demand, not a one-off spike.
• On-hand quantity. Under Products → Inventory, Shopify shows available quantity per variant per location — that’s the number you compare against the reorder point.
• Lead time. Not in Shopify. Measure the full lead time yourself — see below.

Lead time is the part people get wrong

Use the full lead time — from the moment you place the order to the moment the stock is sellable. That includes the supplier’s dispatch time, transit, customs if you import, and your own receiving and put-away. The quoted “ships in 3 days” is rarely the number that matters, and a reorder point built on the quoted figure stocks you out on every delay.

Reorder point vs reorder quantity

They’re different questions. The reorder point is when to order — the trigger level above. The reorder quantity is how much to order once you’re there (often set by economic order quantity, or simply a fixed days-of-cover target). You need both: the reorder point stops you selling out, the reorder quantity stops you over-buying.

Does Shopify calculate reorder points for you?

No. Shopify tracks on-hand quantity per variant and can surface a low-stock figure, but it has no model of your sales velocity or supplier lead times, so it can’t compute a reorder point. Merchants either keep a spreadsheet per SKU — which drifts the moment sales change — or use an app that recalculates the point from live sales. The flip side of the same problem is the stock that never reorders: see how to find dead stock in Shopify.

The fix: Reorderly

Reorderly watches each variant’s real sales velocity against its reorder point, tells you what’s due to reorder and how much, forecasts demand, and drafts the purchase order across your locations — so you reorder on time without babysitting a spreadsheet. You still enter each supplier’s lead time and your service-level preference (Shopify can’t know those), and brand-new products need a little sales history before a forecast means anything. It’s free for small catalogs; the Growth plan is $49/mo (USD) when you scale. It also flags the opposite problem — the dead stock quietly tying up your cash.