Lara Guevara breaks down the reorder point formula: daily sales rate times lead time plus safety stock. If you sell 50 units a day with a 45-day lead time and 500 units of safety stock, reorder at 2,750 units. It kills guesswork and prevents stockouts.
Chapters
Here's the formula that tells you exactly when to reorder. Not when it feels low, when the math says so. Reorder point equals daily sales rate times lead time plus safety stocks. So let me make it real. Say you sell 50 units a day, your lead time is 45 days from PO to warehouse, and your safety stock is 500 units based on your actual demand variability. 50 45 500 2,750. That's your reorder point. When your inventory hits 2,750, you need to place the order. Not before, not after, not when it feels low, not when you get nervous, but when the number says so. This one formula replaces gut feel panic and "I think we're running low." It gives you a trigger point based on real data. And it works every single time. Screenshot this, calculate yours for your top 3 SKUs today. This is the formula that stops the bleeding.