TAHA Engineering Toolsby TAHA Knowledge Lab

Industrial & Manufacturing

Reorder Point & Safety Stock Calculator

When to reorder: reorder point and safety stock from demand, lead time and service level.

Inputs

Calculate from
Inventory level over time as a saw-tooth: reorder point line, safety stock band at the bottom and lead time between placing and receiving an order.Safety stockReorder pointLead timeOrder arrivesStockTime
Stock falls as it is used. When it reaches the reorder point an order is placed; it arrives after the lead time, just as stock reaches the safety stock. Safety stock protects against busier-than-usual days. Diagram not to scale.

Days from placing an order until the stock is available to use.

Result

Reorder point
210units
Safety stock
30units
Average demand during lead time
180units

Place a new order when stock falls to about 210 units. That covers 180 units of expected use while you wait, plus 30 units of safety stock. Round up to whole units.

Educational estimate — check the assumptions below.

About this calculator

The reorder point is the stock level at which you should place a new order, so that the delivery arrives before you run out. It is the demand expected during the lead time plus a safety stock that protects against busier-than-usual days. Enter a safety stock you already use, or let the calculator size it from a target service level.

Formula

I know my safety stock

ROP = d × L + SS

d = average daily demand, L = lead time (days), SS = safety stock.

From a service level

SS = z × σd × √L    ROP = d × L + SS

σd = standard deviation of daily demand, z = standard normal value for the service level (95% → 1.645, 99% → 2.326).

Worked example

Daily demand 20 units, lead time 9 days.

  • Fixed safety stock of 30: ROP = 20 × 9 + 30 = 210 units.
  • Service level 95% with σ = 4 units/day: SS = 1.645 × 4 × √9 = 1.645 × 12 = 19.7 units, so ROP = 180 + 19.7 = 199.7 → 200 units.

Assumptions and limitations

  • Service-level mode assumes daily demand varies randomly and roughly follows a normal distribution, and that lead time is constant.
  • If lead time also varies, more safety stock is needed than this formula gives.
  • Service level here is the cycle service level: the probability of no stock-out during a replenishment cycle.

References

  • Standard reorder-point and safety-stock model, as in operations-management texts (e.g. Heizer & Render; Silver, Pyke & Thomas).