Running out of stock is not bad luck — it is usually the result of not knowing your reorder point.
A reorder point (ROP) is the stock level at which you should place a new order with your supplier. When your inventory hits that number, it is time to reorder — not before, not after.
The reorder point formula
The formula is straightforward:
Reorder Point = (Average Daily Sales × Lead Time) + Safety Stock
Let’s break each part down.
Average daily sales
This is how many units you sell per day on average. If you sold 300 units of a product over the last 90 days, your average daily sales are:
300 ÷ 90 = 3.3 units per day
Use a time period that reflects your current sales trend — 30 to 90 days is usually right. Avoid using a full year if your sales have grown, as it will underestimate your current demand.
Lead time
Lead time is how many days it takes from placing an order with your supplier to having the stock in your hands and ready to sell.
If your supplier takes 21 days to deliver, your lead time is 21.
Tip: Always use your real lead time, not the one your supplier promises. If they regularly deliver in 25 days despite promising 21, use 25.
Safety stock
Safety stock is a buffer — extra inventory you keep on hand to cover unexpected spikes in demand or supplier delays. A simple starting point is 20–30% of your lead time demand.
A worked example
- Product: Blue Sneaker, Size 9
- Average daily sales: 3.3 units
- Lead time: 21 days
- Safety stock: 20 units
Reorder Point = (3.3 × 21) + 20 = 69 + 20 = 89 units
When your stock of Blue Sneaker Size 9 drops to 89 units, place your reorder.
Why getting this wrong is expensive
Too high: You reorder too early, tying up cash in stock you do not need yet.
Too low: You run out before the new stock arrives, losing sales and potentially losing customers permanently.
How Inventory Forecasting Hero handles this automatically
Calculating reorder points manually for every SKU in your store is time-consuming and error-prone. Inventory Forecasting Hero does this automatically — it analyses your Shopify sales history, accounts for your lead time settings, and tells you exactly which products need reordering and in what quantity.
You just review the list and place the order. No spreadsheets, no formulas.
Inventory Forecasting Hero does this automatically for your Shopify store. From $25/month.
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