How to Set Reorder Points for a Small Business (With a Simple Formula)

Running out of your best seller costs more than you think. Here is the simple reorder point formula and a weekly routine to stop stockouts.

Published 2026-11-08 · 3 min read

Running out of your best-selling product is one of the most expensive mistakes a small shop can make. You lose the sale, you often lose the customer, and you usually end up paying for rushed shipping. The fix is a reorder point: the stock level that tells you to order again *before* you run out.

The reorder point formula

Reorder point = average daily sales × supplier lead time (days) + safety stock

That is the whole formula. Here is what each part means.

  • Average daily sales: units sold over the last 30 days, divided by 30.
  • Lead time: the number of days between placing an order and having the stock on your shelf.
  • Safety stock: a buffer for busy weeks and late deliveries.

A worked example

You sell a lavender candle:

  • 60 sold in the last 30 days → 2 per day
  • Your supplier takes 5 days to deliver
  • You keep 5 extra as safety stock

Reorder point = 2 × 5 + 5 = 15. The moment stock drops to 15 candles, you place the order.

How much safety stock?

A simple starting point is half of your lead-time demand (in the example, half of 10 = 5). Raise it for:

  • best sellers you can never afford to run out of
  • suppliers who are often late
  • seasonal peaks such as the run-up to the holidays

Lower it for slow movers, where extra stock just ties up cash.

The weekly inventory routine

  1. Record stock moves: sold, received, damaged and returned.
  2. Check the reorder list: anything at or below its reorder point gets ordered today.
  3. Glance at stock value: money sitting on shelves is cash you cannot use elsewhere.
  4. Once a month, recalculate average daily sales, because demand changes.

Do not forget dead stock

Reorder points stop you running out, but the opposite problem is just as real. Anything that has not sold in 90 days is a candidate for a bundle, a discount or a clear-out. Track sales per month so slow movers are visible.

A simple tool for it

You do not need expensive inventory software for a catalogue of a few dozen products. The Small Business Inventory Tracker dashboard stores every product with SKU, cost, price, supplier and reorder level, flags what needs reordering, totals your stock value and charts units sold per month. It runs offline in your browser with no monthly fee.

If you sell handmade goods, pair it with our freelance invoice and income tracker for wholesale orders, and plan your launches with the social media content calendar.

Quick recap

  • Reorder point = daily sales × lead time + safety stock.
  • Recalculate monthly.
  • Check the reorder list weekly.
  • Watch for slow movers as closely as for stockouts.

More on this