What a reorder point is
A reorder point is the stock level that tells you to order again. When an item drops to it, you place the order, and the new stock arrives just as the shelf gets low, not after it's empty.
It works for anything you buy or make: ingredients, packaging and finished products.
The formula
Reorder point = daily use × lead time + safety stock
- Daily use
- How much you use or sell on an average day.
- Lead time
- Days from placing the order to having it on your shelf.
- Safety stock
- A spare amount for late deliveries and busy weeks.
A worked example
A body butter maker in Accra uses about 15 kg of refined shea butter a day. Their supplier in Tamale usually delivers 10 days after an order, and they keep 50 kg spare in case a delivery is late.
Shea butter (refined), bought from a supplier in Tamale
- Average daily use
- 15 kg
- Supplier lead time
- 10 days
- Use while you wait (15 × 10)
- 150 kg
- Safety stock (just over 3 days of use)
- 50 kg
- Reorder point (150 + 50)
- 200 kg
So they order more shea butter as soon as stock falls to 200 kg. By the time the 150 kg they use while waiting is gone, the delivery is in, and the 50 kg of safety stock hasn't been touched.
Choosing safety stock
Safety stock is the part of the reorder point you choose. Keep more when:
- Your supplier is often late, or deliveries come from far away.
- Sales jump around from week to week, or you have a busy season coming.
- Running out is expensive: a stopped production line, or a big customer waiting.
Set it up in Olonka
Open the product, choose a location above its Variants table, and enter each variant's reorder point. Every location keeps its own, so a warehouse and a shop can reorder at different levels.
The Inventory page then shows each item's reorder point beside its Missing/Excess quantity: what's in stock and expected, minus what's committed to orders and the reorder point. A negative figure means the item is below its reorder point, and Buy or Make on that row starts an order with the missing quantity filled in.
Items under their reorder point on Olonka's Inventory page.
Common mistakes
- Using the supplier's best-case lead time. Use how long delivery usually takes, door to door, including transport and customs.
- Setting it once and forgetting it. Review reorder points when sales change or you switch suppliers.
- Skipping materials. A product can't be made if one ingredient runs out, so set reorder points on materials and packaging too.