Set a reorder point without hiding the assumptions

Choose the planning inputs

Use the same time unit for demand and lead time. If demand is daily, convert supplier lead time to calendar or working days consistently. Calculate an average from a period that reflects the current business, and flag promotions, stockouts, or one-off orders that distort it.

Safety stock is not a random cushion. It should cover the service risk created by demand and lead-time variability, subject to working-capital and obsolescence limits.

Calculate and operationalise the trigger

Multiply average daily demand by average replenishment lead time, then add safety stock. For 18 units per day, 21 days, and 120 units of safety stock, the reorder point is 498 units.

Your system should compare the trigger with inventory position, not blindly with shelf stock. Inventory position commonly considers on-hand, open supply, reservations, and backorders.

• State whether lead time includes review and receiving.
• Round order quantities to real pack sizes.
• Create an exception for demand spikes.

Review on a schedule

Fast movers and unreliable suppliers deserve frequent review. Track stockouts, excess stock, actual lead time, and forecast error. A trigger that is never recalibrated becomes an undocumented guess.