What Is Reorder Point? Using Low-Stock Thresholds to Time Your Orders

You check your stock and something's running low. The real question isn't whether to reorder. It's whether the timing still works.

Here's what you'll learn:

• What a reorder point is
• How to calculate one
• What throws a reorder point off
• How it's different from a par level

What Is a Reorder Point?

A reorder point is the stock level that tells you it's time to place a new order, set so the order arrives before you run out.

It answers one question: at what quantity on hand should this item trigger a new order? Drop below that number, and you're in the window where waiting any longer risks a stockout, meaning the item runs out entirely before the next delivery lands.

How to Calculate a Reorder Point

Use this formula:

Reorder Point = (Average Daily Use × Lead Time in Days) + Safety Stock

Average daily use is how much of the item you typically go through in a day. Lead time is how many days pass between placing an order and receiving it. Safety stock is a buffer for the days when usage runs higher than average or a delivery runs late.

Example: if you use 6 units a day, your supplier's lead time is 3 days, and you keep a safety stock of 5 units, your reorder point is 23 units (6 × 3 + 5). Once your count drops to 23, it's time to order.

What Throws a Reorder Point Off

A reorder point isn't a set-once number. A few things push it out of date:

• Sales volume changes. A busier season or a new menu item raises average daily use, and the old reorder point stops giving you enough runway.
• Supplier lead time changes. A supplier that used to deliver in 2 days but now takes 4 needs a higher reorder point to match.
• Inconsistent counts. A reorder point is only useful if the stock number triggering it is accurate. A count that's off defeats the purpose.
• Ignoring known exceptions. A holiday closure, a local event, or a known slow stretch changes how much runway you actually need, even though the formula doesn't know that on its own.

Reorder Point vs. Par Level

These two get mixed up, but they answer different questions.

• Reorder point tells you when to order: the quantity on hand that triggers a new order.
• Par level tells you how much to have on hand between deliveries, and by extension how much to order to get back there.

A reorder point is the trigger. A par level is the target. You need both: the reorder point tells you it's time to act, and the par level tells you what "fully stocked" looks like once you do.

Key Takeaways

• A reorder point is the stock level that signals it's time to place a new order.
• Formula: (Average Daily Use × Lead Time) + Safety Stock.
• Sales changes, supplier lead time, inconsistent counts, and known exceptions can all throw an old reorder point out of date.
• A reorder point tells you when to order. A par level tells you how much. Restaurants need both working together.
• Signature or high-demand items deserve a tighter reorder point than the rest of your menu. Running out of a dish people specifically came in for carries more risk to word of mouth than running out of a less popular one.

Once your reorder points are set, the next question is how consistently they actually get checked between counts.