The Complete Guide to Reorder Points and Safety Stock
By Arshi Khan, Founder of Just4Marketing · Last reviewed October 2026
Running out of a best-seller loses sales and, on marketplaces, can hurt your ranking; ordering too early ties up cash in stock. The reorder point tells you exactly when to place the next order so it arrives before you run out, with a safety buffer for slow suppliers and busy weeks. This guide explains both common methods and how to choose an order quantity.
Safety stock at different service levels
| 20/day average, σ = 6, 14-day lead time | Z | Safety stock | Reorder point |
|---|---|---|---|
| 90% | 1.28 | 29 units | 309 units |
| 95% | 1.645 | 37 units | 317 units |
| 97.5% | 1.96 | 45 units | 325 units |
| 99% | 2.33 | 53 units | 333 units |
Getting good inputs
Use recent sales
Average the last 30–90 days, and adjust for known seasonal peaks rather than relying on a yearly average.
Measure lead time door to door
Count from placing the order to stock being available to sell, including production, shipping, customs, and warehouse check-in.
Standard deviation
Most spreadsheets calculate it with STDEV over your daily sales. If you don't have it, use the max–average method instead.
Frequently asked questions
How is the reorder point calculated?
Reorder point = average daily sales × lead time in days + safety stock. When your stock falls to this level, place a new order. With 20 sales a day, a 14-day lead time, and 37 units of safety stock, the reorder point is 317 units.
How do I calculate safety stock?
The statistical method uses safety stock = Z × standard deviation of daily sales × √lead time, where Z depends on the service level you want (1.645 for 95%). The simpler max–average method uses (maximum daily sales × maximum lead time) − (average daily sales × average lead time).
What service level should I choose?
95% is a common choice: you'd expect to run out during about 1 in 20 restock cycles. Use 97.5%–99% for best-sellers where stock-outs are costly, and 90% for slow movers where holding extra stock costs more than an occasional stock-out.
What is economic order quantity (EOQ)?
EOQ is the order size that minimizes the combined cost of placing orders and holding stock: √(2 × annual demand × cost per order ÷ holding cost per unit per year). It's a starting point — supplier minimums and price breaks often matter more.