Reorder point and safety stock calculator
Calculate safety stock and the reorder point when both daily demand and supplier lead time vary, for a chosen cycle service level.
Put reorder points to work
Managing stock for several items? The reorder point and safety stock template is a ready-made starting point for inventory planning.
How it is calculated
z = inverse normal of the service level. Safety stock SS = z × √(LT × σd² + d² × σLT²). Reorder point ROP = d × LT + SS.
Worked example
d 100/day, σd 20, LT 5 days, σLT 1 day, 95 % service: z = 1.645, SS = 1.645 × √(5 × 20² + 100² × 1²) = 180 units. ROP = 500 + 180 = 680 units.
Steps
- Enter average daily demand and its standard deviation from sales history.
- Enter the average supplier lead time in days and its standard deviation.
- Choose the cycle service level you need, then read the safety stock and reorder point.
Frequently asked questions
What service level should I use?
Higher service levels need more safety stock. 95 % is a common starting point; the cost of a stockout should decide the final choice.
Why does lead-time variability matter?
The d² × σLT² term adds stock even when demand is steady. Ignoring it understates safety stock for unreliable suppliers.
What if lead time is fixed?
Set σLT to 0. The formula reduces to SS = z × σd × √LT.
References
Silver, Pyke and Peterson, Inventory Management and Production Planning and Scheduling (safety stock with variable demand and lead time). z from the standard normal distribution (Acklam approximation).
Estimates for information only. Verify critical values with a qualified engineer or your supplier standards.