Separate reorder points from days of stock cover

Calculate when to reorder, how much to order and why confirmed incoming stock cannot guarantee coverage before it arrives.

When to reorder and how much are different questions

Consider one SKU with 40 available units, expected demand of 5 units per day, a 10-day supplier lead time, 15 units of safety stock and 10 confirmed incoming units. Available stock here means stock already net of commitments. With a further 7-day review horizon:

• Reorder point = daily demand × lead days + safety stock = 5 × 10 + 15 = 65 units.
• Inventory position = available + confirmed incoming = 40 + 10 = 50 units.
• Order-up-to target = demand × (lead + review days) + safety = 5 × 17 + 15 = 100 units.
• Position is at or below the reorder point, so the suggested order is 100 − 50 = 50 units.

The planner rounds order quantities up to whole units. It recommends an order only when the inventory position reaches the reorder trigger; a target is not a rule to order continuously after every sale.

Incoming stock does not remove the timing risk

On-hand coverage is 40 / 5 = 8 days, shorter than the 10-day lead time. The confirmed incoming units reduce the recommended quantity, but their arrival date is not part of this simple model. Check the delivery schedule and any short-term shortage separately.

Zero demand is not unlimited safety

For zero daily demand, days of cover has no finite value and is shown as not applicable. The file may describe a new product, an inactive item or intermittent sales. Do not substitute an arbitrary large number or interpret it as a reliable demand forecast.

Make the assumptions visible

The calculation assumes steady demand and a chosen lead time. It does not model seasonality, promotions, supplier delays, minimum order quantities or case-pack purchasing. Review the output against those constraints, and rerun after changing the input assumptions. Safety stock is entered explicitly rather than estimated from unsupported confidence claims.

After deciding what to replenish, use the landed cost calculator to review the shipment's freight allocation. Keep the original source files and downloadable reports together for your own records.