# Reorder-Point Worksheet

Buy too late and you run out mid-run; buy too early and cash sits in stock
or a perishable spoils on the shelf. The reorder point is the on-hand level
that keeps you between the two. Fill one line per material you buy, and
re-run it whenever your usage rate or a supplier's lead time shifts.

A reorder point is the on-hand quantity of a material that should trigger a
new purchase order — set so a fresh order arrives just as you'd otherwise run
out. It is built from three of your own numbers: how fast you use the
material, how long a new order takes to arrive, and how big a buffer you want
against things going wrong. The arithmetic is the same for every material:

    reorder point = (average usage rate × lead time) + safety stock

Pull each number from the record that owns it — usage from your production or
consumption history, lead time from your own purchasing history, safety stock
from a rule you set once and apply the same way everywhere. The example
values in every table are illustrations to keep the fields legible; replace
all of them with your own. The reorder point is a planning number, not a
regulation — no agency owns it. It lowers the odds of a stockout; it does not
remove them. Re-run it whenever your usage rate, a supplier's lead time, or
your safety-stock choice changes.

---

## The reorder point, per material

Do this once per purchased material — ingredients and packaging alike. Keep
the usage rate and the lead time on the same time unit: if lead time is in
days, usage must be per day. Lead-time demand is how much you will consume
while waiting for a new order to arrive (average usage rate × lead time);
adding your safety stock — a buffer that covers the times usage runs higher
than average or a delivery arrives late — gives the reorder point.

| Material | Average usage | Lead time | Lead-time demand (usage × lead time) | Safety stock | Reorder point (demand + safety stock) |
| --- | --- | --- | --- | --- | --- |
| (example) Glass jar, 16 oz | 500 ea/day | 10 days | 5,000 ea | 1,500 ea | 6,500 ea |
| (example) Tomato paste | 40 lb/day | 21 days | 840 lb | 200 lb | 1,040 lb |
| (example) Shipping case, 12-count | 42 ea/day | 7 days | 294 ea | 100 ea | 394 ea |
| | | | | | |
| | | | | | |
| | | | | | |

Compare the reorder point against your inventory position — what you have on
hand plus what is already on order — not against on-hand alone. If you trigger
on on-hand by itself, you will reorder again while the first order is still in
transit and end up over-stocked.

## Derive each input

The three tables below feed the columns above. Build them once per material,
and keep the worked numbers so the next person can see how the reorder point
was set.

### Average usage rate

Take a representative stretch of production, total what you consumed, and
divide by the days in that stretch. Use a period long enough to smooth out a
single big or quiet run.

| Derive average usage | Example (glass jars) | Your entry |
| --- | --- | --- |
| Quantity consumed in the period | 10,000 ea | |
| Days in the period | 20 | |
| Average usage (consumed ÷ days) | 500 ea/day | |

Keep the calendar consistent with lead time. If your lead time counts
calendar days, divide by the calendar days in the period; if you only draw
the material on production days and buy against those, use production days on
both sides. Mixing the two quietly under- or over-states the reorder point.

### Lead time

Lead time is the whole wait, from the moment you place the order to the moment
the material is on the shelf and usable. Average your last several orders — a
supplier's quoted lead time is a promise, your own history is the truth.

| Derive lead time | Example (glass jars) | Your entry |
| --- | --- | --- |
| Order placed → shipment received | 8 days | |
| Receiving + QA release | 2 days | |
| Lead time (total) | 10 days | |

Include the receiving and QA-release time whenever the material is not usable
until it clears inspection. A pallet on the dock that is still on hold is not
yet inventory you can draw on.

### Safety stock

Safety stock is the judgment call in the worksheet. Two honest ways to set it,
from simplest to most conservative — pick one and apply it the same way across
materials.

Method A — buffer days. Carry a fixed number of extra days of usage. Simple,
and enough when a material's demand and lead time are steady.

| Safety stock — buffer days | Example (glass jars) | Your entry |
| --- | --- | --- |
| Average usage | 500 ea/day | |
| Buffer days | 3 | |
| Safety stock (usage × buffer days) | 1,500 ea | |

Method B — cover the worst realistic case. Size the buffer to the gap between
a bad stretch (a busy run met by a slow delivery) and an average one. Use it
for materials where usage or lead time genuinely swings.

| Safety stock — worst realistic case | Example (glass jars) | Your entry |
| --- | --- | --- |
| Max usage (a busy day) | 650 ea/day | |
| Max lead time (a slow delivery) | 13 days | |
| Worst-case demand (max × max) | 8,450 ea | |
| Average demand (avg usage × avg lead time) | 5,000 ea | |
| Safety stock (worst-case − average) | 3,450 ea | |

A bigger safety stock means fewer stockouts but more cash sitting in inventory
— and more spoilage risk on anything perishable. In the example, Method B
raises the jar reorder point from 6,500 to 8,450 (which is exactly max usage ×
max lead time — the worst realistic case). Match the method to how much a
stockout of that particular material actually costs you.

## When to reorder, not how much

The reorder point answers when — the on-hand level that trips a new order. It
does not say how much to buy. Order quantity is a separate decision, driven by
supplier minimums, pack and pallet sizes, the material's shelf life, and how
much cash you want tied up in stock. Set the reorder point here; decide the
order quantity on its own terms.

## Review and sign-off

Number and date the worksheet so purchasing and whoever watches inventory work
from the same reorder points. Re-run a line whenever its usage rate or lead
time moves — a reorder point built on last season's numbers reorders at the
wrong moment.

| Field | Example | Your entry |
| --- | --- | --- |
| Material and unit | Glass jar, 16 oz (each) | |
| Reorder point | 6,500 ea | |
| Safety-stock method | Buffer days (3) | |
| Prepared by (name, role) | Sam Ortiz, Operations Lead | |
| Date prepared | 07/15/2026 | |
| Next review (or trigger) | On lead-time or usage change | |