Safety stock and reorder point calculator
From what you sell each month and how long your supplier takes, the calculator tells you how much stock to always keep, when to reorder and how much, so you neither run out nor overfill the warehouse.
The supplier takes longer than the days of cover: the order runs out before the next one arrives. Raise the days of cover.
- Minimum or safety stock
- The reserve for a month of higher sales or a late supplier. It is the floor: reaching it means you are about to run out.
- Reorder point
- When stock drops to this number, the order goes to the supplier. While it arrives, what is left gets sold without touching the reserve.
- Maximum stock
- The highest stock should get right after an order arrives. Going over it is cash sitting idle in the warehouse.
The four calculations, with an example
A distributor sells an average of 300 units a month of a product, and 420 in its best month. The supplier takes 10 days, and once took 15. That is 10 units a day on average (300 ÷ 30) and 14 at peak (420 ÷ 30).
(14 × 15) − (10 × 10) = 110max daily sales × longest lead time − average daily sales × average lead time10 × 10 + 110 = 210average daily sales × average lead time + safety stock10 × 30 = 300average daily sales × days of cover110 + 300 = 410safety stock + order quantityIn this example, when 210 units are left the order for 300 goes out. In the 10 days it takes, about 100 are sold, so it arrives with 110 in the warehouse: exactly the reserve. If sales run higher that month or the supplier is late, the reserve covers it. To see which products move and which don't, the guide to wholesale stock rotation explains how to measure it.
Frequently asked questions
What is safety stock and how is it calculated?
It is the extra stock kept to cover a month of higher sales or a late supplier. Simple formula: (maximum daily sales × longest lead time) − (average daily sales × average lead time).
What is the reorder point?
It is the stock level that, once reached, signals it is time to order from the supplier. It is calculated as average daily sales × average lead time + safety stock.
What is the difference between minimum stock and reorder point?
Minimum stock is the floor that should never be broken: it equals safety stock. The reorder point sits higher: it is the signal to buy in time, so that when goods arrive stock has not yet fallen below the minimum.
How often should it be recalculated?
Whenever sales or the supplier change: going into high season, landing large customers or when lead times get longer. In VentasxMayor, stock control deducts every order as it happens, so the current stock figure is always up to date.