How to work out when to reorder
Restocking is two decisions, not one: when to place the order and how much to order. The first is the one that causes stockouts, and it has a simple formula:
Reorder point = (Lead time in days + Safety stock days) × Average daily sales
When your available inventory drops to the reorder point, it is time to place the order. The logic is that you need enough stock to cover the entire time it takes replenishment to arrive, plus a buffer for the weeks when demand runs hotter than average.
A worked example
A product selling 12 units a day, with a 45-day lead time from supplier to Amazon receipt, and 14 days of safety stock:
Place the order when stock hits 708 units. Order earlier and you pay storage on inventory you do not need yet; order later and you are gambling on the lead time holding.
Lead time is longer than you think
The single most common cause of stockouts is underestimating lead time, because sellers count only production. The real figure is the whole chain:
- Supplier production — from purchase order to goods ready
- Freight — including port delays, which are not rare
- Customs clearance — variable, occasionally very slow
- Prep and labelling — whether at a prep centre or in-house
- Amazon receiving — often 3–10 days after delivery before units are sellable
That last one is invisible in most planning and routinely adds a week. Measure lead time from purchase order to sellable, not to delivered.
Sizing safety stock
Safety stock covers demand variability, not supply failure. Rough guidance:
More is not automatically better. Every extra day of safety stock is capital tied up and storage fees paid — and stock that overshoots by enough eventually attracts the aged inventory surcharge. Undershoot and you risk the low-inventory-level fee, which is charged on every unit you ship while days of cover sits below the threshold. Both sides of that trade-off get more expensive in peak season.
What sellers get wrong
- Averaging over too long a window. A 12-month average hides a product that has doubled in the last six weeks. For most SKUs, 30–60 days of recent velocity predicts better than a year.
- Ignoring Q4 entirely. Reorder points calculated on off-season velocity will stock you out in November. Plan Q4 from last year's Q4, not from October.
- Forgetting that a stockout costs rank. Running out does not just cost the lost sales — it costs organic position, which takes weeks to rebuild. That is what safety stock is really insuring against.
- Ordering to hit a freight minimum. A container-sized order that takes 14 months to sell will cost more in storage and surcharges than the freight saving.
This calculator works one SKU at a time from numbers you supply. To get reorder points computed automatically from real sales velocity across your catalogue, with restock alerts before you hit the point, see SellerGuards inventory intelligence.