Reorder Point Calculation: Simple Spreadsheet Formula

You need a reorder point calculation now—not tomorrow. If you’re tired of stockouts that halt sales or excess inventory that ties up cash, this guide shows you the exact formula and a ready‑to‑use spreadsheet so you can order at the right moment, every time.

Why Guessing Inventory Costs You Money

Guesswork turns inventory into a guessing game. One week you’re out of your bestseller, the next you’re stuck with pallets of unsold goods—both scenarios drain cash flow and damage supplier relationships. A data‑driven reorder point calculation removes that uncertainty and puts you in control.

Step‑by‑Step Reorder Point Calculation

The math is only three numbers long:

Reorder Point = (Average Daily Demand × Lead‑Time in Days) + Safety Stock

1. Average Daily Demand – Total units sold in a typical week ÷ 7.
2. Lead‑Time in Days – Days between placing an order and receiving it on the shelf.
3. Safety Stock – A buffer for demand spikes; many small businesses use ≈ 20 % of weekly demand.

Example:

• Average Daily Demand = 15 units
• Lead‑Time = 5 days
• Safety Stock = 21 units (20 % of 105 weekly units)

Reorder Point = (15 × 5) + 21 = 96 units. Order when inventory drops to 96.

Retail Store Example

• Daily demand: 30 shirts
• Lead‑Time: 7 days
• Safety Stock: 50 shirts

Reorder Point = (30 × 7) + 50 = 260 shirts.

Template Download & How to Use It

I’ve built a free Excel template that automates the steps above:

• Colored cells highlight when you’re below the threshold.
• Copy‑paste rows for each SKU and replace the three inputs—no formulas to write.
• Monthly update takes under five minutes.

[Download the Reorder Point Template]

Quick FAQ

Q: Can I use this for multiple products?
A: Yes. Duplicate the three‑row block for each SKU, change the demand and lead‑time values, and the sheet recalculates automatically.

Q: How often should I refresh the numbers?
A: Review average daily demand and lead‑time at least once a month, or whenever a supplier changes their shipping schedule.

Q: What if my demand is highly seasonal?
A: Calculate separate average daily demand for each season and switch the values in the template as the season changes.

Implement the reorder point formula today, watch stockouts disappear, and free up cash that was previously stuck in excess inventory. The spreadsheet does the heavy lifting—your business reaps the results.