Inventory Reorder Point Calculator
Computes optimal reorder points, safety stock levels, and economic order quantities for each inventory item. Minimizes stockout risk while controlling carrying costs using demand variability and supplier lead time data.
Operations - Inventory Reorder Point Calculator.xlsx
Excel (.xlsx) — No macros — Works in Excel, Google Sheets, LibreOffice
What This Spreadsheet Solves
- Stockouts caused by reordering too late
- Excess inventory tying up working capital due to reordering too early or too much
- Safety stock levels set by guesswork rather than statistical analysis
- No standard formula for balancing ordering costs against carrying costs
- Supplier lead time variability not factored into reorder decisions
Who This Is For
- Inventory managers optimizing stock levels
- Supply chain analysts building reorder policies
- Warehouse managers reducing stockout frequency
- E-commerce operations teams managing SKU-level inventory
Inputs
- #Average daily demand (units)
- #Demand standard deviation (daily)
- #Supplier lead time (days)
- #Lead time variability (days)
- $Ordering cost per order
- $Annual carrying cost per unit
Outputs
- Reorder point (units)
- Safety stock level
- Economic order quantity (EOQ)
- Annual ordering cost at EOQ
- Annual carrying cost at EOQ
- Total annual inventory cost
How Calculations Work
Reorder point equals average daily demand times lead time, plus safety stock. Safety stock is calculated from the desired service level (z-score) multiplied by the standard deviation of demand during lead time. EOQ uses the classic formula: square root of (2 times annual demand times ordering cost divided by carrying cost). Total cost is the sum of ordering and carrying costs at the EOQ.
Example Use Case
Scenario: A product has average daily demand of 50 units (std dev: 8), lead time of 7 days (variability: 2 days), ordering cost of $150/order, and carrying cost of $3/unit/year. Target service level: 95%.
Result: Safety stock: 42 units. Reorder point: 392 units. EOQ: 1,581 units. Annual ordering cost: $1,733. Annual carrying cost: $2,372. Total annual inventory cost: $4,105.
What You Get — 5 Sheets
Technical Details
Frequently Asked Questions
What service level should I target?
95% is standard for most items. Critical items (no acceptable stockout): 99%. Low-priority items: 90%. Higher service levels require exponentially more safety stock.
How do I measure demand standard deviation?
Calculate the standard deviation of daily demand over the past 60-90 days. Use longer periods for seasonal products.
Does EOQ work for items with variable demand?
EOQ assumes relatively stable demand. For highly variable demand, use the safety stock calculation alongside EOQ and review reorder points more frequently.
What if my supplier lead time varies significantly?
Enter the average and standard deviation of lead time. The calculator accounts for lead time variability in the safety stock formula.
How often should I recalculate reorder points?
Monthly for stable items. Weekly for fast-moving or seasonal items. Immediately after any significant demand shift or supplier change.
Download Inventory Reorder Point Calculator
Ready to use immediately. Enter your data in the INPUT sheet, see results in OUTPUT.