What is the reorder point formula?

Reorder point = (average daily sales x lead time in days) + safety stock. The first term covers expected demand while you wait for the shipment, and the safety stock buffers the variability that the average hides. Calculate it per SKU.

How do I find my average daily sales for a reorder point?

Take total units sold over a representative recent window, say 30 to 90 days, and divide by the number of days. Use a window that reflects current demand, exclude periods when you were out of stock (they suppress the average), and adjust upward for seasonal SKUs heading into a known peak so your reorder point is not based on a quiet period.

Should lead time include Amazon's receiving time?

Yes. A unit is not sellable until Amazon checks it in, so your reorder-point lead time must include production, freight, customs, prep, and Amazon inbound receiving. Using the supplier's manufacturing quote alone is the most common cause of stockouts.

What is the difference between a reorder point and reorder quantity?

The reorder point tells you when to place an order; the reorder quantity tells you how much to order. The quantity depends on your supplier's MOQ, storage costs, and cash position, while the reorder point depends on velocity, lead time, and safety stock.

Should I have a different reorder point for every SKU?

Yes. Velocity and lead time vary across products, so a single blanket reorder point will overstock slow movers and stock out fast movers. Calculate it per SKU, and recheck it whenever demand shifts or a supplier's lead time changes.

How often should I recalculate reorder points?

Monthly for stable SKUs, weekly for volatile or seasonal ones, and immediately after any event that changes an input: a supplier switching factories, a freight mode change from air to ocean, or a demand step-change from a rank improvement. A reorder point is a snapshot of conditions when you calculated it, and conditions move.

Do I need inventory software to manage reorder points, or is a spreadsheet enough?

A spreadsheet works fine up to roughly a few dozen SKUs with stable demand and one or two suppliers. Beyond that, ecommerce inventory management software pays for itself by recalculating velocity automatically, netting out in-transit stock, and alerting you the day a trigger fires. If you sell on multiple channels from shared stock, software is close to mandatory because a manual sheet can't keep cross-channel demand current.

Does accounting software handle reorder points?

General ledgers like QuickBooks and Xero don't calculate reorder points on their own; they record the financial side once inventory is purchased and sold. Sellers usually pair the ledger with an inventory or restock tool, or use a platform like BeanHawk that tracks landed cost, inventory valuation, and sales velocity together, so reorder timing and the books draw on the same numbers. Whatever you choose, make sure per-SKU landed cost feeds the decision, not just unit counts.

Glossary

What is Reorder point?

The stock level that should trigger a new purchase order — velocity × lead time + safety stock.

A reorder point is the inventory level that should trigger a new purchase order. Hit it, and you place a restock; let stock fall below it, and you risk running out before the next shipment arrives. The reorder point is built from two things you can measure: how fast a SKU sells (its daily velocity) and how long it takes a replacement order to arrive (lead time), plus a safety-stock buffer for the days when demand spikes or your supplier slips. Get it right and you never stock out; get it wrong and you either lose the Buy Box to a competitor or bury cash in inventory you cannot sell.

The reorder point formula is simple arithmetic, but for Amazon sellers the inputs are anything but. Lead time includes manufacturing, freight, customs, prep, and Amazon's own inbound receiving time, which can add days or weeks before a unit is sellable. That is why a reorder point that looks comfortable on paper still leads to stockouts: the clock starts the moment you place the PO, not the moment the truck leaves the factory.

There's also a financial side that most inventory guides skip. Every reorder is a cash commitment, usually your single largest recurring outflow, and the units it buys sit on your balance sheet as an asset until they sell. So the reorder point isn't just an operations number. It decides when cash leaves the business, how much inventory value you're carrying, and how exposed you are to storage fees on stock that arrived too early.

How to calculate a reorder point

The core reorder point formula is: average daily sales multiplied by lead time in days, plus safety stock. The first term covers expected demand during the wait for your shipment; the safety stock covers the variability the average hides. Calculate it per SKU, because velocity and lead time differ wildly across your catalog.

Worked example: a SKU sells an average of 20 units a day, and your full lead time from PO to sellable-in-FBA is 45 days. Demand during lead time is 20 x 45 = 900 units. If you hold 300 units of safety stock, your reorder point is 900 + 300 = 1,200 units. When available inventory drops to 1,200, you place the next PO. Skip the safety stock and the reorder point would be 900, which leaves zero margin for a demand spike or a delayed container.

One refinement matters in practice: count in-transit and inbound units. If you have 1,100 units available in FBA plus 400 units already on the water from a previous PO, your true inventory position is 1,500, still above the 1,200 trigger. Fire reorders off available stock alone and you'll double-order. Fire them off inventory position (on hand plus on order minus anything committed) and the math holds. This is the single adjustment that separates a working reorder system from one that whipsaws between overstock and stockout.

•Reorder point = (average daily sales x lead time in days) + safety stock
•Example: 20 units/day x 45 days = 900 units of lead-time demand
•Add safety stock of 300 units
•Reorder point = 900 + 300 = 1,200 units
•Place the PO the moment available stock hits 1,200
•Compare the trigger against inventory position (on hand + on order), not on-hand stock alone

Getting lead time right for Amazon FBA

The most common reorder-point mistake is underestimating lead time. For an FBA seller, the true lead time is not 'how long the supplier takes to make it.' It is the full chain: production, ocean or air freight, customs clearance, prep-center labeling, transit to Amazon, and Amazon's inbound receiving and check-in, which can lag noticeably during peak season. Each link adds days, and the reorder point has to reflect the sum.

Use your actual historical lead times, not the supplier's quote. If your last three reorders took 40, 48, and 52 days door-to-shelf, plan around the high end, not the average, especially heading into Q4. A reorder point built on optimistic lead time is the single biggest cause of avoidable stockouts and the lost Buy Box sessions and rank decay that follow.

Velocity deserves the same skepticism. A 30-day average taken right after a Lightning Deal overstates normal demand and will have you ordering into a cliff. A 90-day average taken across a slow summer understates what a seasonal SKU will do in November. Look at the trend, not just the average: if weekly sales are climbing 10 percent month over month, a static reorder point calculated in March is already stale by June. Recalculate on a schedule, monthly for stable SKUs, weekly for anything volatile or seasonal.

A second worked example: seasonal demand and a slipping supplier

Say you sell a kitchen gadget that averages 15 units a day from January through September but historically triples in Q4. Your supplier quotes 30 days of production, and your last few shipments took another 25 days of freight, customs, and FBA check-in. Planning an October restock off the trailing average would give you a lead-time demand of 15 x 55 = 825 units. But the demand that actually arrives during those 55 days is closer to 45 a day, or 2,475 units. Order off the stale number and you stock out in the most profitable weeks of the year.

The fix is to build the reorder point from forecast demand for the window the shipment covers, not trailing demand from the window you just lived through. For that October PO you'd use the seasonal rate: 45 x 55 = 2,475 units of lead-time demand, plus a fatter safety stock because Q4 is also when suppliers and carriers slip. If the supplier has ever missed a quoted date by two weeks, price that into lead time now, because a two-week slip against 45 units a day is 630 units of sales you won't get back.

Reorder point vs reorder quantity

The reorder point tells you when to order; it does not tell you how much. Those are two separate decisions. How much you order is the reorder quantity (or economic order quantity), driven by your supplier's minimum order quantity, your storage costs, your cash position, and how much you want to avoid Amazon's aged-inventory surcharges by not overstocking slow movers.

In practice the two work together. A short lead time and steady demand let you order smaller, more frequent batches and keep less cash tied up. A long lead time or a high MOQ forces larger, less frequent orders and a higher reorder point to cover the gap. The right balance protects both your in-stock rate and your cash flow, which is the real reason inventory accuracy belongs in your books, not just your spreadsheet.

Common reorder point mistakes

Using supplier-quoted lead time instead of measured door-to-shelf time is the classic error, but it has company. Sellers routinely calculate one blanket reorder point for a whole catalog, ignore in-transit stock and double-order, forget that a stockout during the measurement window suppresses the sales average (you can't sell what wasn't there, so the velocity input reads artificially low), and never revisit triggers set a year ago under different demand.

The subtler mistake is treating the reorder point as purely an ops number and ordering without checking cash. A trigger can fire on three SKUs the same week; if your settlement cycle means the cash to fund all three POs hasn't landed yet, you're choosing between a stockout and a credit line. Sellers who reconcile their books monthly see this coming. Sellers who look at their bank balance and guess usually find out at the worst moment, which is one reason clean ecommerce accounting and inventory planning are more connected than they look.

•Supplier's production quote used as full lead time (ignores freight, customs, prep, FBA check-in)
•One blanket trigger across SKUs with different velocities and lead times
•Reorders fired off on-hand stock instead of inventory position, causing double-orders
•Velocity averages polluted by stockout periods or one-off promotions
•Triggers never recalculated after demand or lead time shifts
•No check that cash will actually be available when the trigger fires

How the reorder decision hits your books

Bookkeeping-wise, hitting a reorder point kicks off a chain of entries. The PO itself isn't an expense; when the inventory arrives (or when you prepay, depending on terms), the cost lands on the balance sheet as an inventory asset at landed cost: unit price plus freight, duties, and prep. Nothing touches your profit and loss until units sell, at which point cost of goods sold is recognized. Order too much and your P&L can look great while your bank account starves, because the cash went into an asset that hasn't converted back yet.

This is where inventory planning and accounting software meet. Good amazon accounting software tracks each PO at landed cost, carries the inventory asset per SKU, and releases COGS as units sell, so your margin per SKU is real rather than estimated. Generic setups struggle here: quickbooks for amazon sellers works well as the ledger of record, but out of the box it won't compute per-unit landed cost across a container of mixed SKUs or tie sales velocity to remaining stock. Most sellers pair the ledger with a connector or an inventory layer that does that math and posts clean summary journals.

BeanHawk approaches it from the accounting side: it tracks POs and landed cost per unit alongside sales velocity, so the same data that values your inventory and drives COGS also shows which SKUs are approaching their reorder points. Whether you use it or a standalone planning tool, the principle is the same. The reorder decision should be made with the true cost and the true cash picture in view, not just a unit count.

Spreadsheets, seller tools, and when to upgrade

A spreadsheet is a perfectly honest way to manage reorder points for a small catalog. Ten SKUs, one supplier, stable demand: a weekly-updated sheet with velocity, lead time, and a trigger column will beat most software on transparency, and it costs nothing. Don't let anyone tell you otherwise.

The spreadsheet breaks at scale, and it breaks quietly. Fifty SKUs across two suppliers with different lead times, plus seasonal swings, plus in-transit stock to net out, is past the point where a manual sheet stays current. That's when dedicated ecommerce inventory management software earns its subscription: it pulls live sales data, recalculates velocity continuously, accounts for inbound shipments, and flags triggers the day they fire instead of the Friday you next open the file. If you sell on Amazon plus your own Shopify store or eBay, multi channel inventory management software matters more still, because a stockout decision has to weigh demand from every channel drawing on the same pool of stock.

When you evaluate amazon inventory management software, or broader amazon seller tools that bundle restock alerts, check three things: does it use your measured door-to-shelf lead time or a generic default, does it count inbound and in-transit units in the trigger math, and does it connect to your accounting so restock decisions reflect landed cost and available cash. A tool that only watches unit counts solves half the problem. The other half is financial, and it's the half that determines whether the restock is affordable.

Frequently asked questions

What is the reorder point formula?: Reorder point = (average daily sales x lead time in days) + safety stock. The first term covers expected demand while you wait for the shipment, and the safety stock buffers the variability that the average hides. Calculate it per SKU.
How do I find my average daily sales for a reorder point?: Take total units sold over a representative recent window, say 30 to 90 days, and divide by the number of days. Use a window that reflects current demand, exclude periods when you were out of stock (they suppress the average), and adjust upward for seasonal SKUs heading into a known peak so your reorder point is not based on a quiet period.
Should lead time include Amazon's receiving time?: Yes. A unit is not sellable until Amazon checks it in, so your reorder-point lead time must include production, freight, customs, prep, and Amazon inbound receiving. Using the supplier's manufacturing quote alone is the most common cause of stockouts.
What is the difference between a reorder point and reorder quantity?: The reorder point tells you when to place an order; the reorder quantity tells you how much to order. The quantity depends on your supplier's MOQ, storage costs, and cash position, while the reorder point depends on velocity, lead time, and safety stock.
Should I have a different reorder point for every SKU?: Yes. Velocity and lead time vary across products, so a single blanket reorder point will overstock slow movers and stock out fast movers. Calculate it per SKU, and recheck it whenever demand shifts or a supplier's lead time changes.
How often should I recalculate reorder points?: Monthly for stable SKUs, weekly for volatile or seasonal ones, and immediately after any event that changes an input: a supplier switching factories, a freight mode change from air to ocean, or a demand step-change from a rank improvement. A reorder point is a snapshot of conditions when you calculated it, and conditions move.
Do I need inventory software to manage reorder points, or is a spreadsheet enough?: A spreadsheet works fine up to roughly a few dozen SKUs with stable demand and one or two suppliers. Beyond that, ecommerce inventory management software pays for itself by recalculating velocity automatically, netting out in-transit stock, and alerting you the day a trigger fires. If you sell on multiple channels from shared stock, software is close to mandatory because a manual sheet can't keep cross-channel demand current.
Does accounting software handle reorder points?: General ledgers like QuickBooks and Xero don't calculate reorder points on their own; they record the financial side once inventory is purchased and sold. Sellers usually pair the ledger with an inventory or restock tool, or use a platform like BeanHawk that tracks landed cost, inventory valuation, and sales velocity together, so reorder timing and the books draw on the same numbers. Whatever you choose, make sure per-SKU landed cost feeds the decision, not just unit counts.

Go deeper

See what Amazon owes you — free

Connect your seller account and get a free reimbursement audit. No credit card, keep 100% of what you recover.