Reorder points made simple: never run out of your best sellers
A reorder point is the stock level that tells you to order again. Here is the simple formula, a worked example and the common mistakes.
In this article
Running out of a best seller costs you twice: the sale you lost today, and the customer who tries a competitor tomorrow. A reorder point stops that from happening.
The formula
Reorder point = average daily sales × supplier lead time (days) + safety stock
When stock falls to the reorder point, you place the next order.
A worked example
A grocery shop sells about 12 bags of 5 kg rice a day. The supplier delivers 4 days after an order. The owner wants 2 days of safety stock.
- Lead-time demand: 12 × 4 = 48 bags
- Safety stock: 12 × 2 = 24 bags
- Reorder point: 72 bags
When the shelf and back room together hold 72 bags, it is time to order.
How much safety stock?
More safety stock for items that sell unevenly (XYZ class Y or Z), for suppliers that are often late, and for A items you can never be without. Less for slow, cheap C items.
Common mistakes
- Using last year’s sales speed for a product that has taken off.
- Forgetting stock that is already on order.
- One reorder point for all branches, when they sell at different speeds.
- Never reviewing: reorder points should move with the seasons.
Automate it
In ZaleBee, reorder suggestions are calculated from how fast each item actually sells at each location, respect your min / max levels and preferred supplier, and turn into purchase orders per supplier in one step.
ZaleBee Team
Product & customer success
We build ZaleBee and help shops, distributors and restaurants across India and the GCC set it up. These guides come from what we see every day.