Reorder Point Calculator

A reorder point (ROP) is the inventory level that triggers a new purchase order. When stock falls to the ROP, you place an order so it arrives before you run out. Setting it correctly balances two risks: too high and you carry excess inventory (waste capital); too low and you risk stockouts (lose sales, disappoint customers). The formula is: ROP = (Average Daily Demand × Lead Time) + Safety Stock.

Safety stock accounts for uncertainty in both demand and supplier lead time. The statistical formula is: SS = Z × √(Lead Time × σ_demand² + Demand² × σ_lead_time²). Z is the service-level z-score (1.65 for 95%, 2.33 for 99%). σ_demand is the standard deviation of daily demand. σ_lead_time is the standard deviation of lead time in days. This formula captures variability in both dimensions simultaneously.

Service level (also called fill rate) is the probability of not stocking out during a replenishment cycle. 95% is the most common target for non-critical goods — it balances safety stock cost against stockout risk. For critical components (production line parts, medical supplies, or high-revenue SKUs), target 98–99.5%. For slow-moving or low-margin C-category items, 90% is often sufficient.

EOQ is the order quantity that minimizes total annual inventory cost (ordering cost + holding cost). Formula: EOQ = √(2 × Annual Demand × Order Cost per PO / Holding Cost per Unit). At EOQ, ordering cost equals holding cost, which is the mathematical optimum. Ordering smaller quantities increases annual ordering frequency and cost; ordering larger quantities increases holding cost. EOQ finds the balance point.

Calculate daily demand for each of the past 30–90 days, then compute the standard deviation of those daily values. In Excel: =STDEV(demand_range). Most ERP systems (including Odoo) report demand variability directly. If historical data is unavailable, use 20–30% of average daily demand as an estimate. Higher variability (seasonal products, irregular customers) requires more safety stock.

Yes. The Multi-SKU tab lets you enter up to 10 products with individual demand, lead time, and variability inputs. The calculator computes safety stock, reorder point, EOQ, and annual cost for each. This is useful for prioritizing which SKUs need attention and for calculating total inventory investment across your product portfolio.