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Inventory Reorder Point Template

Sheets for each product's reorder point and safety stock, built from your own sales and delivery dates, plus a reorder policy and weekly purchase plan.

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What you get

Pack of 8 files: 4 documents, 4 spreadsheets

Inventory Reorder Point Template
  • How the Reorder Points Were ComputedDocument
  • Reorder PolicyDocument
  • Supplier NoteDocument
  • Minimum Order Quantity NoteDocument
  • Velocity by SKUSpreadsheet
  • Reorder PointsSpreadsheet
  • Purchase PlanSpreadsheet
  • Overstock RegisterSpreadsheet
RiverInventory Reorder Point Template

Reorder Points

[Company] — [n] SKUs, [n] suppliers, computed [date]

Lead time comes from your own receipts, not from the quote. A row with no receipt count has a mean and no spread, and with no spread there is no safety stock to compute.

SKUSupplierUnits a dayDaily spreadLead meanLead spreadReceiptsCycle stockSafety stockReorder point
——————————
——————————
——————————
——————————

The trigger is a position, and it takes three columns rather than one

On handWhat a shelf count returns. Includes units sold and not yet picked, so it reads high
On orderPlaced and not yet received. Not on the shelf but already bought, so leaving it out buys it twice
AllocatedCommitted to orders that have not shipped. Physically present, and not available to sell
PositionOn hand, plus on order, less allocated. This is the number that goes against the reorder point

Safety stock is z times the square root of the mean lead time times the daily demand variance, plus mean daily demand squared times the lead time variance. Both terms, because both things vary, and on a small catalogue the second is usually the larger.

Page 1 of 1232 words

How to calculate a reorder point and safety stock

A reorder point is the stock level at which you order a product again. The formula is average daily sales times the supplier's average lead time in days, plus safety stock. The first part covers what you expect to sell while you wait for delivery. Safety stock covers the days when sales run high or a delivery runs late.

Build every input from your own records: daily sales from your order history, and lead times from your purchase orders. A supplier's quote gives the typical wait but not how much it varies, and safety stock has to cover that variation too.

A woman in a blue work shirt types at a computer on a wooden desk inside a fenced warehouse storage area
Your own sales and purchase records hold every number the formula needs. Photo: EqualStock on Unsplash

Gather two numbers from your own records

Each product needs two inputs: units sold a day, and the days its supplier takes to deliver. For each, find the average and the standard deviation, which measures how far individual days or deliveries stray from the average. Excel's STDEV.S does the arithmetic.

  • Daily sales: count units sold per product per day over 12 months, zero days included. Dropping the zeros makes slow sellers look steadier than they are.
  • Seasonal products: use last year's sales for the months ahead. A wool throw sized on July sales runs out in November.
  • Lead time: count the days from placing each purchase order to having the stock on the shelf, ready to sell.
  • Delivery count: with fewer than six deliveries, treat a supplier's spread as a guess and widen it.

Calculate the reorder point

Lecture slides from MIT's Logistics Systems course, by Chris Caplice, define the reorder point as expected demand over the lead time plus safety stock1. Work it out in three steps per product.

  1. Expected demand

    Multiply average daily sales by average lead time in days. That's what you expect to sell while the order is on its way.

  2. Safety stock

    Calculate z × √(L × σd² + d² × σL²). Here d is average daily sales and L is average lead time, σd and σL are their standard deviations, and z comes from your service level.

  3. Reorder point

    Add the two, and round up to a whole unit.

The square root holds two terms: swings in sales, then swings in delivery time. Peter King, a supply chain consultant writing in APICS magazine, gives this version for when sales and delivery times vary independently and follow a bell curve2. The larger term tells you whether the buffer mostly protects you from customers or from your supplier.

ExampleOne product, worked throughAn illustrative example written for this guide, using the template's invented sample seller.

Stoneware dinner plate: sells 14.2 a day, with a daily standard deviation of 4.1.

Supplier: 14 deliveries averaged 11 days, with a standard deviation of 2 days.

Expected demand: 14.2 × 11 = 156.2 units.

Safety stock at 95%: 1.65 × √(11 × 4.1² + 14.2² × 2²) = 1.65 × √(184.9 + 806.6) = 52.0 units.

Reorder point: 156.2 + 52.0 = 208.2, rounded up to 209 units.

  • The supplier drives it. Of the 991.5 under the root, 806.6 (81%) comes from the supplier's lead time.
  • Against a flat rule. Two weeks of cover would hold 199 plates, almost four times the 52 needed.

Pick your service level on purpose

The z comes from your cycle service level: the share of restocking cycles in which you don't run out before the next delivery. That's different from fill rate, the share of demand you fill from stock. King lists the z for each level and puts typical goals between 90% and 98%2.

What each service level means and costs

Cycle service levelzRuns out in aboutSafety stock vs 90%
90%1.281 cycle in 10Baseline
95%1.651 cycle in 2029% more
98%2.051 cycle in 5060% more

Safety stock rises in step with z. In Excel, NORM.S.INV(0.95) returns about 1.645.

Price the choice before you make it. Every step up adds stock you pay to carry all year. A stockout can cost the margin on every sale you miss until the delivery lands, so it hurts most on slow suppliers. A product pricing template gives you the margin per unit.

You don't need one level for everything. King suggests setting z by product group, using strategic importance, profit margin or dollar volume. On a small catalog, two tiers are plenty.

In the US, out-of-stock orders have rules

The FTC's rule on mail, internet and phone orders requires a reasonable basis to expect you can ship when you say3. If you give no date, that means within 30 days. If you can't ship in time, you must offer the buyer a choice: accept the delay or cancel for a full, prompt refund.

Compare it with inventory position, not the shelf

Check each reorder point against inventory position. Caplice's slides define it as on hand, plus on order, minus backorders, minus committed1. Leave out stock on order and you buy it twice. Leave out committed units (allocated, in the template) and a product below its point looks healthy.

Your store's on-hand figure may already include sold units. Shopify's developer documentation defines on-hand as the sum of available, committed, reserved, damaged, safety stock and quality control units4. Units count as committed when a placed order hasn't been fulfilled.

One reorder point, two answers

ProductShelf count saysInventory position says
Dinner plate210 on hand, point 209: don't order210 − 18 committed = 192: order now
Mug180 on hand, point 329: order180 + 300 on order − 26 committed = 454: don't order

Figures from the template's sample Purchase Plan.

Don't count late orders as stock

A purchase order long past its supplier's usual range isn't stock on the way. It's a question for the supplier. Chase it, and check your position without it.

Decide how much to order

When the position reaches the reorder point, order enough to cover sales until your next order, plus any shortfall below the point. For the dinner plate, ordering about once a week, that's 7 × 14.2 + (209 − 192) = 116 units.

That assumes you act the day the position reaches the point. If you check only weekly, add the 7 days between checks to L, as King does by counting any review period in the lead time2. Then order up to the new point at each check: 311 for the dinner plate, so 311 − 192 = 119 units.

Before you send any order, divide the supplier's minimum by daily sales: a minimum of 90 vases selling 0.4 a day buys 225 days of stock. Treat anything over 90 days as a decision: ask whether the minimum is firm or can be split across deliveries. If a slow seller on Amazon is already overstocked, check whether its listing is losing the sale before you discount it.

Every order is also a cash decision. Add each order's total to a 13-week cash flow forecast in the week you'll pay it.

Recompute when the inputs change

Recompute a product's point when one of these happens, and review the whole list monthly:

  • A delivery lands well outside its supplier's usual range
  • Sales over the last 30 days differ from the yearly rate by more than 25%
  • The supplier changes factory, shipping route or terms

Then check the results. King suggests confirming that safety stock is being consumed in about half of the cycles2, as accurate averages predict, and that you're hitting your service level. If not, find the cause before changing anything.

Before you place this week's orders

  • Daily sales include zero-sale days and the right season
  • Lead times come from your own receipts, not supplier quotes
  • Every reorder call uses inventory position, not the shelf count
  • Any minimum buying over 90 days of stock was a deliberate choice
  • Each order's total sits in your cash forecast

The template on this page has a sheet or note for every step, filled in with sample numbers. Or open it with Edit with AI, and River works out every product's numbers from your sales and purchase order exports.

How to use this template

Fill in the files yourself, or open the template in River. River asks for two exports: sales by product, and purchase orders with the dates each was placed and received. From those it works out daily sales, each supplier's real lead times and a reorder point for every product.

A weekly reorder alert then lists the products below their point on inventory position, overdue purchase orders, and any unusual delivery or sales shift that moves a point. It reports, and you decide what to order.

  1. Download it or open it in River

    Download the four Word documents and four CSV sheets free, or open the template in River and send two exports.

  2. Measure sales and lead times

    Fill in Velocity by SKU and the lead time columns from your own records, or let River build them from your exports.

  3. Set each reorder point

    Choose a service level, then compute safety stock and a reorder point for each product in Reorder Points.

  4. Order on inventory position

    Each week, update on hand, on order and allocated in the Purchase Plan, and order what has crossed its point.

What's in the template

The pack, worked through on twelve SKUsThe Reorder Points, Purchase Plan and Overstock Register sheets, and the variance split behind them.
Inventory Reorder Point Template
RiverReorder Points

Reorder Points

Bracken and Loom. Twelve SKUs, three suppliers, lead times taken from eleven to fourteen receipts each rather than from a quote.

SKUSupplierUnits a dayLead meanLead spreadSafety stockReorder pointSupplier share of variance
BL-1001Halloran14.21125220981%
BL-1002Halloran6.81122710271%
BL-1014Halloran22.51128132984%
BL-4001Halloran0.41126117%
BL-2003Ravensworth3.1186349086%
BL-2007Ravensworth9.41869626695%
BL-2011Ravensworth1.6186184781%
BL-3002Meridian18.734928391997%
BL-3005Meridian11.334917556093%
BL-3009Meridian27.43494181,35095%
BL-3012Meridian4.93497824589%
BL-3018Meridian2.23493811376%

The last column is the half of the safety stock that is absorbing the supplier rather than the customer. Eleven of twelve sit between 71 and 97 percent. BL-4001 is the exception at 0.4 units a day, where the demand is lumpy against its own mean, and it is the only row on this catalogue a demand-shaped rule fits.

RiverAgainst the flat rule

Two weeks of cover, against the computed figure

SupplierMean lead timeSpread95th percentile wait
Halloran Ceramics11 days2 days14 days
Ravensworth Metalworks18 days6 days28 days
Meridian Textile Co34 days9 days49 days
SKUSupplierComputedFlat ruleDifference
BL-1014Halloran81315−234
BL-1001Halloran52199−147
BL-1002Halloran2796−69
BL-2007Ravensworth96132−36
BL-2003Ravensworth3444−10
BL-2011Ravensworth1823−5
BL-4001Halloran660
BL-3018Meridian3831+7
BL-3012Meridian7869+9
BL-3005Meridian175159+16
BL-3002Meridian283262+21
BL-3009Meridian418384+34
What the flat rule boughtCountStockA year
Over-buffered, none of them on Meridian6$3,563$855 to carry
Under-buffered, every one of them on Meridian5—$55,275 exposed

Sorting that middle table by the difference sorts it by supplier, and nobody asked it to. The five under-buffered rows are the expensive half, because a 49 day wait is also a 49 day outage: one stockout on each of the five is $55,275 of gross margin against the $855 a year the rule saves on the other six.

RiverPurchase Plan

Purchase Plan

The same twelve rows, with the trigger read both ways. Three disagree, and they disagree in both directions.

SKUOn handOn orderAllocatedPositionPointOff on handOff positionOrder
BL-30096900416491,350ReorderReorder893
BL-3005240015225560ReorderReorder414
BL-2007118011107266ReorderReorder225
BL-301216803165245ReorderReorder150
BL-1002960492102ReorderReorder58
BL-1001210018192209HoldReorder116
BL-300240260034968919ReorderHold—
BL-101418030026454329ReorderHold—
BL-20033000229890HoldHold—
BL-20112400024047HoldHold—
BL-301842001419113HoldHold—
BL-400188008811HoldHold—
The three that changed answerAt cost
BL-3002, 600 units already in transit$5,910
BL-1014, 300 units already in transit$1,560
BL-1001, 18 units allocated, position 192 against a point of 209Was reading healthy

The first two are $7,470 of duplicate ordering on a catalogue holding $50,410 of inventory. The third is the same missing column running the other way, and it is the harder one to catch, because 210 units against a reorder point of 209 looks like a SKU nobody needs to think about.

RiverWhat the spread costs

What the spread costs, with the mean unchanged

Service level held at 95 percent. Only Meridian’s consistency varies, and its mean lead time is 34 days in every row.

Meridian’s lead time spreadSafety stock at costAgainst today
9 days, today$10,594—
6 days$7,385−$3,209
3 days$4,413−$6,181
0 days$2,712−$7,883
Cycle service levelzSafety stock at costCarrying cost a year
90%1.28$11,069$2,657
95%, the default here1.65$14,283$3,428
98%2.05$17,693$4,246
Overstock RegisterCoverPolicyExcessAt cost
BL-4001220 days7159$1,841
BL-3018191 days94213$3,568
BL-2011150 days78115$3,094
BL-200397 days7858$1,146

Moving from 90 to 98 percent costs $1,589 a year across the whole catalogue, which is the sort of number that is only a decision once it sits next to the $55,275. And the register at the bottom is $9,648 at cost, 19 percent of all inventory in the business, every row of it a slow mover bought to a supplier minimum.

  • Reorder PolicyFive rules covering the trigger, safety stock, service level, order size and when to recompute.
  • How the Reorder Points Were ComputedThe worked example in full: 12 products, three suppliers, and where a two-week rule went wrong.
  • Supplier NoteOne page per supplier: delivered lead times, how much they swing, and the stock a steadier range would free.
  • Minimum Order Quantity NoteHow to check what a supplier's minimum buys before you accept it, and five alternatives when it's too much.
  • Velocity by SKU sheetUnits sold a day per product, with the daily spread, the 30-day rate, unit cost and margin.
  • Reorder Points sheetEach product's lead time, safety stock and reorder point, beside what a flat two-week rule would hold.
  • Purchase Plan sheetOn hand, on order and allocated per product, inventory position, and this week's order quantities at cost.
  • Overstock Register sheetProducts holding more than lead time plus 60 days of stock, priced at cost, and how each got there.

Common questions

How do you calculate a reorder point?

Multiply average daily sales by the supplier's average lead time in days, then add safety stock. A product selling 10 units a day with a 12-day lead time and 40 units of safety stock has a reorder point of 160. Reorder when inventory position, not the shelf count, falls to that number. If you only check weekly, add 7 days to the lead time.

What's the difference between a reorder point and safety stock?

Safety stock is the cushion for surprises, like a sales spike or a late delivery. The reorder point contains it, plus the units you expect to sell while an order is in transit. When things go to plan, you're down to about your safety stock as the new delivery arrives.

What is inventory position?

Inventory position is stock on hand, plus stock on order from suppliers, minus units committed to customer orders or backorders. Compare it with your reorder point, because a shelf count misses deliveries already on the way and still counts units customers have bought but you haven't shipped.

Is two weeks of stock a good safety stock rule?

Usually not, because a weeks-of-cover rule sizes the buffer on sales alone and ignores how reliable each supplier is. In the template's example, two weeks gave one product almost four times the safety stock it needed, while all five products from its slowest supplier got too little.

How often should you recalculate reorder points?

Recalculate when an input moves, not only on a schedule. Good triggers are a delivery far outside a supplier's normal range or a product's recent sales drifting more than about 25% from its yearly rate. A supplier changing factory, route or terms resets its history. A monthly pass catches the rest.

Is this inventory reorder point template free?

Yes. The four Word documents and four CSV sheets download free, with no signup. Every sheet comes filled in for an invented home goods seller, so you can follow each calculation before swapping in your own numbers. Edit with AI opens the same files in River.

What does Edit with AI do?

It opens the template in a free River workspace and asks for two exports: your sales history and your purchase orders. River turns them into daily sales figures, each supplier's delivery record and a reorder point per product, then checks weekly for products below their point. Nothing is ordered until you order it.

Sources

  1. MIT OpenCourseWare. “Inventory Management: Probabilistic Demand.” ocw.mit.edu (opens in a new tab)

  2. APICS magazine. “Crack the Code: Understanding safety stock and mastering its equations.” web.mit.edu (opens in a new tab)

  3. FTC. “Business Guide to the FTC's Mail, Internet, or Telephone Order Merchandise Rule.” ftc.gov (opens in a new tab)

  4. Shopify. “Apps in inventory management.” shopify.dev (opens in a new tab)

Written by

Chandler Supple

Co-founder & CEO, River

Chandler has spent the last six years working in AI, building tools for millions of users and Fortune 100 companies. In 2025, he co-founded River to build a new kind of operating system for AI agents.

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Reviewed by

Brian Joseff, Co-founder, River

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