The reorder point formula
Reorder Point = (Average Daily Sales × Lead Time in Days) + Safety Stock
- Average daily sales — how many units of a product you typically sell per day, based on recent sales history
- Lead time — how many days it takes from placing a purchase order to receiving the stock
- Safety stock — a buffer quantity held in reserve to cover unexpected demand spikes or supplier delays
When your available stock drops to this number, it's time to reorder — not before (which ties up cash in excess inventory) and not after (which risks a stockout).
A worked example
Say you sell a product that moves 8 units per day on average, and your supplier takes 7 days to deliver after you place an order. You also want a 3-day safety stock buffer in case sales pick up or the shipment runs late.
Reorder Point = (8 × 7) + (8 × 3) = 56 + 24 = 80 units
When your stock for that product drops to 80 units, you should place a new purchase order. By the time those 80 units sell through during the 7-day lead time, the new stock should arrive just as you're about to run out — with the safety stock buffer absorbing any unexpected spike along the way.
Reorder point vs. economic order quantity (EOQ)
These two concepts get confused because they're both used in the same reordering decision, but they answer different questions:
- Reorder point answers when to reorder
- Economic order quantity (EOQ) answers how much to order at once, balancing ordering costs against holding costs
A complete reordering system uses both: ROP tells you the trigger moment, EOQ tells you the order size.
Why reorder points matter for Shopify merchants specifically
Shopify's native admin tracks inventory counts but does not calculate reorder points automatically — it shows you what you have, not when to act on it. Until August 2026, Stocky (Shopify's own free inventory app) filled this gap with min/max forecasting, but that feature was removed from Stocky in July 2025, and Stocky itself shuts down completely on August 31, 2026.
For Shopify merchants, this means reorder point calculation now has to come from either a manual spreadsheet process or a dedicated third-party app — Shopify's admin alone won't do it.
How Supremo calculates reorder points
Supremo, a Shopify inventory app, applies this exact formula per SKU, recalculated hourly using real sales data pulled directly from each store's order history:
Reorder Point = (Sales Velocity × Lead Time) + Safety Stock Buffer
Both lead time and safety stock buffer can be set globally or per product, so a merchant with a fast 3-day local supplier and another with a slow 30-day overseas supplier can each get accurate reorder points without manual recalculation. When a SKU's available stock crosses its reorder point, it shows up immediately in a single "needs ordering today" view, and an optional email alert can notify the merchant directly.
This is a transparent, rules-based calculation rather than a machine-learning prediction — the same formula every inventory textbook describes, applied automatically and shown clearly rather than hidden inside a black-box forecast.
See how Supremo calculates reorder points →Frequently Asked Questions
What is a reorder point in simple terms?
A reorder point is the stock level at which you need to place a new order so the replacement stock arrives before you run out. It's calculated from how fast a product sells, how long it takes to get more, and how much buffer stock you want to keep on hand.
What is the formula for reorder point?
The standard formula is: Reorder Point = (Average Daily Sales x Lead Time in Days) + Safety Stock. Some variations express average daily sales as demand rate or sales velocity, but the calculation is the same.
What is the difference between reorder point and safety stock?
Safety stock is one component used inside the reorder point calculation, not a separate threshold. It is the buffer quantity added on top of expected lead-time demand to protect against demand spikes or supplier delays. The reorder point is the full calculated trigger level, which includes safety stock as part of its total.
Does Shopify calculate reorder points automatically?
No. Shopify's native admin shows current stock levels and lets merchants set basic low-stock alerts, but it does not calculate a reorder point using sales velocity, lead time, and safety stock. This requires either a manual calculation or a dedicated inventory app.
How is a reorder point different from an economic order quantity (EOQ)?
A reorder point determines when to place an order. An economic order quantity determines how much to order at one time to minimize total ordering and holding costs. They are used together but answer different questions.
How do I calculate my reorder point on Shopify?
Pull average daily sales for a product from Shopify Admin under Analytics, then Reports, then Sales by product, using the last 30 days. Divide total units sold by 30 to get average daily sales. Multiply that by your supplier's lead time in days, then add your chosen safety stock buffer. Shopify's native admin doesn't run this calculation for you automatically.
How do I know when it's time to reorder stock?
You know it's time to reorder when your available stock drops to your calculated reorder point, not when you've already sold out. Waiting until stock hits zero means you'll have a gap with no inventory while the new order is in transit, since reorder points are specifically calculated to account for that lead time.
What's the difference between a low stock alert and a reorder point?
A low stock alert is a simple threshold you set manually (for example, notify me when stock drops below 20 units), without accounting for how fast that product sells or how long it takes to restock. A reorder point is calculated specifically from sales velocity and lead time, so it's accurate per product rather than a flat number applied across your whole catalog.
How often should I recalculate my reorder point?
Recalculate whenever sales velocity or supplier lead time changes meaningfully. Most merchants review monthly at minimum, and more often for fast-moving or seasonal products. A reorder point calculated once and never updated drifts out of date as demand shifts, which is why automated, continuously-recalculated reorder points tend to stay more accurate than a static spreadsheet number.