Demand variability matters
Reorder points work best when demand and lead time are measured consistently. Seasonal demand and supplier delays may require more detailed modeling.
Example
If average daily demand is 40 units, lead time is 12 days and safety stock is 150 units, reorder point is 40 x 12 + 150 = 630 units.
Common mistakes
Use the same unit throughout: units per day, days of lead time and units of safety stock. Do not mix weekly demand with daily lead-time math.
Limitations
This simple formula does not optimize service level, carrying cost, order quantity or supplier reliability. It is a planning estimate, not a full inventory policy.
Last reviewed: 2026-05-17