Most reorder levels are set by feel, once, when the product is added, and never looked at again. That is why so many of them are wrong in both directions at the same time: some items alert constantly and get ignored, others run out with no warning at all.
The calculation that fixes this is not complicated. It is two numbers you already know, multiplied together.
The calculation
Reorder level = how many you sell per day × how many days the supplier takes + a buffer.
That is it. The insight it encodes is that a threshold is not about how little stock is left — it is about how long you have to wait for more. An item that sells slowly but takes three weeks to arrive needs a higher threshold than one that sells briskly and comes the next morning.
| Item | Sells per day | Supplier takes | Bare minimum | Set it at |
|---|---|---|---|---|
| Cooking oil 1 L | 8 | 4 days | 32 | 40 |
| Rice 5 kg | 5 | 3 days | 15 | 22 |
| A slow branded item | 1 | 14 days | 14 | 20 |
| Something you can fetch yourself | 10 | same day | 10 | 12 |
Notice the third row. An item selling one a day needs a threshold of twenty because the supplier is slow, which is exactly the case people get wrong by eye — it looks like a slow item that needs little attention, and it is the one most likely to be out of stock for a fortnight.
Set them on far fewer items than you think
- Anything a customer would go elsewhere for. That is the real cost of a stockout — not the sale, the visit.
- Your high-margin fast movers. Running out of these is the most expensive gap in the shop.
- Anything with a slow or unreliable supplier, regardless of how fast it sells.
- Nothing else, for now. You can always add more once these are working.
Getting the daily rate without guessing
- 1
Take a month of sales for the item
Product-wise sales reporting gives you the quantity. A month smooths out the individual busy and quiet days.
- 2
Divide by the number of days you traded
Days open, not days in the month. A shop closed on Sundays has about 26 trading days, and using 30 understates the daily rate by a sixth.
- 3
Multiply by the supplier's real lead time
Real, not promised. If they say two days and it is usually four, the number you want is four.
- 4
Add a quarter to a half again as buffer
More for things where being out of stock is embarrassing, less for things where it is merely annoying.
A low-stock alert is not telling you that you are nearly out. It is telling you that today is the last day ordering still works.