How to Calculate Reorder Points for Your Shopify Store

The trigger that tells you when to order

Safety stock tells you how much buffer to carry. But it does not tell you when to place the order. For that, you need a reorder point.

The reorder point is the inventory level at which you should place a new purchase order. When your on-hand quantity for a SKU drops to or below this number, it is time to reorder. Not next week. Not when you get around to it. Now.

If you read our guide on how to calculate safety stock, you already have the hardest piece of the puzzle. The reorder point formula is straightforward once safety stock is in place.

The formula

ROP = (Average Daily Demand x Average Lead Time) + Safety Stock

That is it. Three inputs, one multiplication, one addition.

The first term, Average Daily Demand times Average Lead Time, represents the inventory you expect to sell while waiting for your next shipment to arrive. If you sell 4 units per day and your supplier takes 21 days to deliver, you will sell roughly 84 units between placing the order and receiving it.

The second term, Safety Stock, is the buffer that protects you against the reality that demand is not perfectly predictable and suppliers do not always deliver on schedule.

Together, they give you a single number per SKU: the inventory level that triggers a reorder.

A worked example

Let's say you sell a candle that has these characteristics:

• Average daily demand: 4 units/day
• Average lead time: 21 days (supplier is overseas)
• Safety stock: 24 units (calculated using the combined variability formula from our safety stock guide, with a 95% service level)

ROP = (4 x 21) + 24 = 84 + 24 = 108 units

When your on-hand inventory for this SKU drops to 108 units, you place a new order. If you wait until you are at 80 units, you are already eating into your safety stock. If you wait until 50, you are likely going to stock out before the shipment arrives.

What happens if you skip safety stock

A common shortcut is to calculate the reorder point without safety stock:

ROP (no buffer) = Average Daily Demand x Average Lead Time = 4 x 21 = 84 units

This works perfectly in a world where you sell exactly 4 units every single day and your supplier delivers in exactly 21 days every single time. That world does not exist.

In reality, some days you sell 7 units. Some days you sell 1. Your supplier occasionally takes 28 days instead of 21. Without the safety stock buffer, any deviation from the average puts you at risk of a stockout.

The reorder point without safety stock is a plan for average conditions. The reorder point with safety stock is a plan for the real world.

The companion metric: days of supply

Once you have a reorder point, there is a second metric that makes your weekly review faster: days of supply.

Days of Supply = Current On-Hand Inventory / Average Daily Demand

If you have 160 units on hand and you sell 4 per day, you have 40 days of supply. If your lead time is 21 days and your reorder point is 108 units, you know you have roughly 13 days before you hit the reorder trigger.

Days of supply translates raw unit counts into something your brain can process instantly. "I have 160 units" is abstract. "I have 40 days of inventory" is actionable. You can immediately compare it to your lead time and know whether you are comfortable.

Days to stockout: the more precise version

Days of supply assumes you have no incoming inventory. If you already have a purchase order in transit, the picture changes.

Days to Stockout = (Current On-Hand + Incoming Inventory) / Average Daily Demand

If you have 160 units on hand and 200 units arriving in 10 days, your effective inventory position is 360 units, which at 4 units per day gives you 90 days before stockout. That is a very different situation than 40 days.

This is why tracking incoming inventory matters. Without it, your reorder point will fire even when you already have a shipment on the way, and you will end up double-ordering.

Setting reorder points for every SKU

The reorder point formula is the same for every SKU, but the inputs are different. A fast-moving product with a long lead time will have a high reorder point. A slow mover from a domestic supplier will have a low one.

Here is what a reorder point table looks like for a small catalog:

Notice that the Phone Case has a high reorder point despite a short lead time, because it sells 12 units per day. The Leather Wallet has a relatively low reorder point because demand is low, even though the lead time is the longest in the table.

The reorder point adapts to each SKU's specific demand pattern and supply chain characteristics. That is the entire point: no single rule of thumb works across a catalog.

The weekly workflow

Once reorder points are set for every SKU, your weekly inventory review becomes a simple comparison:

1. Update your current on-hand inventory (paste your latest Shopify inventory export).
2. For each SKU, compare on-hand quantity to the reorder point.
3. Any SKU where on-hand is at or below the reorder point goes on the order list.
4. Check if there is already a PO in transit for that SKU. If yes, check days to stockout instead.
5. For SKUs that need ordering, use your Economic Order Quantity or supplier MOQ to determine how much to order.

That is the entire process. Five steps, five to ten minutes, once a week. The math has already been done. You are just reading the output and acting on it.

When reorder points need updating

Reorder points are not set-and-forget. They should be recalculated when:

• Demand patterns change. A SKU that was selling 4/day is now selling 8/day after a marketing push. Your reorder point needs to double.
• Lead times change. Your supplier moved warehouses and lead time went from 14 to 21 days. Every SKU from that supplier needs a new reorder point.
• You change your service level. Upgrading from 95% to 99% for your top sellers increases safety stock, which increases the reorder point.
• Seasonality kicks in. If you know demand will spike for Q4, adjust your average daily demand upward starting in September so your reorder points reflect the coming surge, not the trailing average.

A good practice is to recalculate reorder points monthly using the most recent 90 days of sales data. This keeps the model responsive to trends without overreacting to short-term noise.

The common mistakes

Mistake 1: Using a static reorder point for all SKUs. "Reorder when we hit 50 units" treats a SKU that sells 1/day the same as one that sells 15/day. The first has 50 days of supply. The second has 3 days. One is fine. The other is an emergency.

Mistake 2: Ignoring lead time differences across suppliers. If you have one domestic supplier (7-day lead time) and one overseas supplier (28-day lead time), the reorder points for their respective SKUs should be dramatically different. A single "reorder 2 weeks before we run out" rule does not work.

Mistake 3: Not accounting for incoming inventory. If you already placed a PO for 200 units arriving next week, you do not need to place another order just because on-hand dropped below the reorder point. This is where days to stockout (including incoming) prevents unnecessary double-ordering.

Mistake 4: Never updating the model. A reorder point calculated in January using holiday season data will be wrong by March. Recalculate monthly.

Putting it all together

The reorder point is the single most actionable output of an inventory planning model. Safety stock is the foundation. Average daily demand and lead time are the inputs. But the reorder point is what you actually look at every Monday morning to decide what to order.

If you have been managing inventory by gut feel, by eyeballing stock levels, or by waiting until something runs out, a properly calculated reorder point for every SKU will change how your Monday mornings feel. Instead of uncertainty, you get a list. Instead of guessing, you get a trigger. Instead of reacting to stockouts, you prevent them.

The math is not complicated. The discipline of checking it weekly is what separates stores that run out of bestsellers from stores that do not.