Updated March 2026
Reorder Point: What It Means for Inventory Management
The reorder point is the inventory level at which you should place a new purchase order. When stock for a SKU drops to this number, it's time to reorder so new stock arrives before you run out.
The Formula
Reorder Point = (Avg Daily Sales × Lead Time) + Safety Stock
The first part (daily sales × lead time) covers the units you'll sell while waiting for the delivery. Safety stock is added as a buffer against variability.
Example
You sell a candle that moves 8 units/day. Your supplier delivers in 21 days. You've calculated your safety stock at 25 units.
Reorder Point = (8 × 21) + 25 = 168 + 25 = 193 units
Reorder when stock hits 193 units.
At 193 units, you have enough stock to cover the 21-day lead time (168 units) plus a 25-unit buffer for demand spikes or late deliveries.
Why It Matters for Shopify Merchants
Without a reorder point, you're guessing when to order. Order too late and you stock out. Order too early and you tie up cash and warehouse space. For Shopify merchants managing 100+ SKUs, it's impossible to monitor every product manually. Each SKU has a different sell rate and potentially a different lead time, so each needs its own reorder point. Getting this right is the difference between smooth operations and scrambling to fix stockouts. The biggest mistake merchants make is using a flat reorder point across all products — say, reorder when anything hits 50 units. But a product selling 20 units/day with a 14-day lead time needs a reorder point of 300+, while a product selling 1 unit/day with the same lead time only needs a reorder point around 20. A flat number will overstock your slow movers and understock your best sellers at the same time.
How Alertr Helps
Alertr tracks sell rates for every SKU and calculates days of stock remaining. When a product approaches its reorder point, you get an automatic alert via email or Slack — no spreadsheets, no manual checking.
Related Terms
Frequently Asked Questions
What happens if I set the reorder point too high?
You'll order too early and carry excess inventory. This ties up cash and costs money in storage. It's less risky than setting it too low, but it hurts your cash flow.
Should every SKU have a different reorder point?
Yes. Every product has different daily sales velocity and potentially different supplier lead times. A blanket reorder point across all SKUs will overstock slow movers and understock best sellers.
How does lead time affect the reorder point?
Longer lead times mean higher reorder points. If your supplier takes 45 days instead of 14, you need to trigger the reorder much earlier to avoid running out while waiting.
Can I automate reorder point monitoring?
Yes. Tools like Alertr connect to your Shopify store and track inventory levels against calculated thresholds automatically, sending alerts when it's time to reorder.
Skip the Manual Calculations
Alertr tracks sell rates and forecasts stock levels automatically from your Shopify data. Inventory forecasting and reorder alerts. Free tier available, no credit card required.
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