Reorder level

A reorder level, or reorder point, is the stock quantity that tells you it is time to order more. When stock falls to that number, you place the order. It is set so that what is left lasts until the new stock arrives, with a little extra for surprises.

The formula

Reorder level = average daily sales × supplier lead time in days + safety stock.

Example

A pharmacy sells about 12 strips of a common blood pressure tablet a day. The distributor delivers 3 days after an order. That is 12 × 3 = 36 strips needed while waiting. The owner adds 14 strips of safety stock for days when sales jump or delivery runs late. The reorder level is 36 + 14 = 50 strips.

If each strip costs the pharmacy Rs 180, holding that safety stock ties up 14 × 180 = Rs 2,520. That is a small price for not sending regular patients to the pharmacy next door.

Why it matters

• Fast-moving items do not run out.
• Slow items are not over-ordered, so cash is not stuck on the shelf.
• Ordering becomes a routine anyone can follow, instead of the owner's memory.

Reorder levels suit shops that order when stock falls. Restaurants with fixed delivery days often use a par level instead.

How software handles it

A reorder level is only as good as the stock figure it is compared with. Inventory software that reduces stock with every sale gives you a current count to check against, and low-stock alerts in Taajir tell you when an item falls below its level. Our guide on reorder levels and safety stock shows how to set them item by item.