What is the reorder point formula?

Reorder point = (average daily sales x lead time in days) + safety stock. The first term covers expected demand while you wait for the shipment, and the safety stock buffers the variability that the average hides. Calculate it per SKU.

How do I find my average daily sales for a reorder point?

Take total units sold over a representative recent window, say 30 to 90 days, and divide by the number of days. Use a window that reflects current demand, and adjust upward for seasonal SKUs heading into a known peak so your reorder point is not based on a quiet period.

Should lead time include Amazon's receiving time?

Yes. A unit is not sellable until Amazon checks it in, so your reorder-point lead time must include production, freight, customs, prep, and Amazon inbound receiving. Using the supplier's manufacturing quote alone is the most common cause of stockouts.

What is the difference between a reorder point and reorder quantity?

The reorder point tells you when to place an order; the reorder quantity tells you how much to order. The quantity depends on your supplier's MOQ, storage costs, and cash position, while the reorder point depends on velocity, lead time, and safety stock.

Should I have a different reorder point for every SKU?

Yes. Velocity and lead time vary across products, so a single blanket reorder point will overstock slow movers and stock out fast movers. Calculate it per SKU, and recheck it whenever demand shifts or a supplier's lead time changes.

Glossary

What is Reorder point?

The stock level that should trigger a new purchase order — velocity × lead time + safety stock.

A reorder point is the inventory level that should trigger a new purchase order. Hit it, and you place a restock; let stock fall below it, and you risk running out before the next shipment arrives. The reorder point is built from two things you can measure: how fast a SKU sells (its daily velocity) and how long it takes a replacement order to arrive (lead time), plus a safety-stock buffer for the days when demand spikes or your supplier slips. Get it right and you never stock out; get it wrong and you either lose the Buy Box to a competitor or bury cash in inventory you cannot sell.

The reorder point formula is simple arithmetic, but for Amazon sellers the inputs are anything but. Lead time includes manufacturing, freight, customs, prep, and Amazon's own inbound receiving time, which can add days or weeks before a unit is sellable. That is why a reorder point that looks comfortable on paper still leads to stockouts: the clock starts the moment you place the PO, not the moment the truck leaves the factory.

How to calculate a reorder point

The core reorder point formula is: average daily sales multiplied by lead time in days, plus safety stock. The first term covers expected demand during the wait for your shipment; the safety stock covers the variability the average hides. Calculate it per SKU, because velocity and lead time differ wildly across your catalog.

Worked example: a SKU sells an average of 20 units a day, and your full lead time from PO to sellable-in-FBA is 45 days. Demand during lead time is 20 x 45 = 900 units. If you hold 300 units of safety stock, your reorder point is 900 + 300 = 1,200 units. When available inventory drops to 1,200, you place the next PO. Skip the safety stock and the reorder point would be 900, which leaves zero margin for a demand spike or a delayed container.

•Reorder point = (average daily sales x lead time in days) + safety stock
•Example: 20 units/day x 45 days = 900 units of lead-time demand
•Add safety stock of 300 units
•Reorder point = 900 + 300 = 1,200 units
•Place the PO the moment available stock hits 1,200

Getting lead time right for Amazon FBA

The most common reorder-point mistake is underestimating lead time. For an FBA seller, the true lead time is not 'how long the supplier takes to make it.' It is the full chain: production, ocean or air freight, customs clearance, prep-center labeling, transit to Amazon, and Amazon's inbound receiving and check-in, which can lag noticeably during peak season. Each link adds days, and the reorder point has to reflect the sum.

Use your actual historical lead times, not the supplier's quote. If your last three reorders took 40, 48, and 52 days door-to-shelf, plan around the high end, not the average, especially heading into Q4. A reorder point built on optimistic lead time is the single biggest cause of avoidable stockouts and the lost Buy Box sessions and rank decay that follow.

Reorder point vs reorder quantity

The reorder point tells you when to order; it does not tell you how much. Those are two separate decisions. How much you order is the reorder quantity (or economic order quantity), driven by your supplier's minimum order quantity, your storage costs, your cash position, and how much you want to avoid Amazon's aged-inventory surcharges by not overstocking slow movers.

In practice the two work together. A short lead time and steady demand let you order smaller, more frequent batches and keep less cash tied up. A long lead time or a high MOQ forces larger, less frequent orders and a higher reorder point to cover the gap. The right balance protects both your in-stock rate and your cash flow, which is the real reason inventory accuracy belongs in your books, not just your spreadsheet.

Why reorder points belong in cash-accurate books

Reorder points are an inventory-management tool, but they have a direct line to your financials. Every PO you trigger is cash leaving the business, and every unit sitting in FBA is cash you cannot redeploy. Tracking reorder points alongside true landed cost lets you see not just whether you will stock out, but what each restock actually costs and how it moves your inventory valuation and COGS.

When your accounting system knows the landed cost of each unit and the velocity of each SKU, reorder timing becomes a financial decision rather than a guess. BeanHawk ties unit-level cost and sales velocity together so the same data that values your inventory also tells you when a restock is coming due, keeping your books cash-accurate and your shelves stocked.

Frequently asked questions

What is the reorder point formula?: Reorder point = (average daily sales x lead time in days) + safety stock. The first term covers expected demand while you wait for the shipment, and the safety stock buffers the variability that the average hides. Calculate it per SKU.
How do I find my average daily sales for a reorder point?: Take total units sold over a representative recent window, say 30 to 90 days, and divide by the number of days. Use a window that reflects current demand, and adjust upward for seasonal SKUs heading into a known peak so your reorder point is not based on a quiet period.
Should lead time include Amazon's receiving time?: Yes. A unit is not sellable until Amazon checks it in, so your reorder-point lead time must include production, freight, customs, prep, and Amazon inbound receiving. Using the supplier's manufacturing quote alone is the most common cause of stockouts.
What is the difference between a reorder point and reorder quantity?: The reorder point tells you when to place an order; the reorder quantity tells you how much to order. The quantity depends on your supplier's MOQ, storage costs, and cash position, while the reorder point depends on velocity, lead time, and safety stock.
Should I have a different reorder point for every SKU?: Yes. Velocity and lead time vary across products, so a single blanket reorder point will overstock slow movers and stock out fast movers. Calculate it per SKU, and recheck it whenever demand shifts or a supplier's lead time changes.

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