Nevershort

Reorder point calculator

Work out when to reorder a product and how much safety stock to hold. Free, nothing to sign up for, and it runs in your browser.

Units per day. Leave out days you were sold out, or the average comes out too low.
Days from placing the order to having stock you can sell.
How often you stay in stock until the next delivery lands. 95% means you run out before about 1 delivery in 20.
I know how much my sales and lead time vary
Standard deviation of units sold per day. Left blank, we assume it is about the same as the average, which is what Nevershort assumes too.
Standard deviation of the lead time, in days. A supplier who is sometimes a week late needs a bigger buffer than one who never is.

Reorder point

172units

Sold during the lead time
126
Safety stock
45.4

Reorder when stock on hand falls to this number. It is a starting point: it is only as good as the daily-sales figure you put in.

What is a reorder point?

The stock level at which you place the next order. Order then, and the new stock arrives just as the old stock runs down to your safety buffer. Order later, and you sell out while you wait.

It has two parts: what you expect to sell while the order is on its way, and a buffer for the days you sell more than expected or the supplier is late.

The formula

lead-time demand = daily sales × lead time
safety stock = z × √(lead time × sales spread² + daily sales² × lead-time spread²)
reorder point = lead-time demand + safety stock, rounded up

z comes from the service level: 1.28 for 90%, 1.65 for 95%, 2.05 for 98%, 2.33 for 99%. Each extra point of service costs more buffer than the last, so 99% is rarely worth it for a product you can backorder.

Safety stock grows with the square root of lead time, not the lead time itself. A lead time four times as long needs about twice the buffer, not four times. Scaling it straight up is how long-lead products end up overstocked.

A worked example

A product sells 6 a day and the supplier takes 21 days. You want to be in stock 95% of the time.

lead-time demand = 6 × 21 = 126
safety stock = 1.65 × √(21 × 6²) = 1.65 × 27.5 = 45.4
reorder point = 126 + 45.4 = 171.4, so 172

If you know daily sales only vary by about 3 units, safety stock drops to 1.65 × √(21 × 3²) = 22.7, and the reorder point to 149. Knowing your own spread is worth 23 units of stock you don’t have to pay for.

Where this goes wrong

Almost always in the daily-sales number. An average that counts the days you were sold out as zero sales is too low, so the reorder point is too low, so you sell out again. And one product is easy; three hundred, each with its own supplier and its own weeks of history, is a spreadsheet nobody keeps up to date.

Get this number for every product, from your own Shopify sales.

Nevershort works out daily sales with sold-out days left out, uses each supplier’s lead time, and emails you what to reorder every Monday.

Install on Shopify