Inventory how-to

Why your reorder points keep being wrong

Reorder points are usually wrong because one of three inputs is stale: your daily sales rate, your supplier's real lead time, or your safety days.

Short answer: Reorder points are usually wrong because one of three inputs is stale: your daily sales rate, your supplier's real lead time, or your safety days. If any of these is a guess instead of a current number, the reorder point will be off and you will either run out or over-order.

The formula only works if the inputs are current

Reorder point is daily sales multiplied by lead time plus safety days. It looks simple, but each of those three numbers changes over time. Daily sales shifts with trends and seasons. Lead time shifts when a supplier gets busy or switches freight methods. Safety days should reflect how unreliable the supplier actually is. Most stores set these once and never touch them again, so the reorder point slowly drifts away from reality.

Daily sales calculated on the wrong window

If you calculate daily sales from a full year, you will miss a product that has picked up speed in the last month. If you calculate it from the last 7 days, a single bulk order will throw the number off. A rolling 28-day window is usually a better balance, long enough to smooth out noise, short enough to catch real shifts in demand.

Lead time is a guess, not a measurement

Many stores use the lead time the supplier quoted at the start of the relationship and never update it. If a supplier has quietly gone from 10 days to 18 days, every reorder point based on 10 days will be too low, and you will stock out before the replacement order arrives. Lead time needs to be tracked per supplier, ideally per SKU, and corrected when actual deliveries run later or earlier than quoted.

Safety days set the same for every product

Treating every SKU with the same safety buffer ignores the fact that some suppliers are reliable and some are not, and some products cannot afford a stockout while others can. A fast mover from an unreliable overseas supplier needs more safety days than a slow mover from a supplier three miles away. If you use one flat number across the board, some reorder points will be too tight and others too loose.

Step by step

  1. List your top 20 SKUs by sales volume and check when you last updated their lead time.
  2. Compare quoted lead time against your last 3 actual delivery dates per supplier and adjust if they differ.
  3. Recalculate daily sales using a consistent rolling window, not a mix of windows across products.
  4. Set safety days per supplier based on how consistent their delivery has actually been, not a flat default.
  5. Rebuild reorder points with the corrected numbers and compare them against what you were using before.
  6. Recheck lead times and safety days every quarter, or sooner if a supplier's performance changes.

Worked example

Say a SKU sells 6 units a day on average over the last 28 days. The supplier was quoted at 10 days lead time but the last three orders actually took 14, 16, and 15 days to arrive, so the real lead time is closer to 15 days. Safety days for this supplier should be 5, since deliveries have been inconsistent. The old reorder point was 6 x (10 + 5) = 90 units. The corrected reorder point is 6 x (15 + 5) = 120 units. Using the old number of 90 means you would have placed the reorder about 5 days too late.

How SteadyShelf helps

SteadyShelf calculates daily sales from a rolling 28-day window by default and moves to seasonality-aware forecasting once it has about 13 months of history, and it builds the order-by date per SKU from each supplier's lead time and safety days, so you are not relying on a stale manual formula. It still needs you to keep supplier lead times and safety days honest and updated when delivery performance changes, since it cannot detect a supplier quietly slowing down on its own.

$29/month flat, unlimited products and suppliers, 30-day free trial. Run the numbers now with the free reorder point calculator.

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FAQ

What if I sell the same product across multiple warehouses or locations?

SteadyShelf forecasts and sets reorder points at the store level, not per location, so it does not split demand or safety stock across warehouses. If you stock the same SKU in multiple locations, you will need to track location-level splits and transfers manually outside the app.

How often should I update lead times and safety days?

Check them at least quarterly, and immediately after any order that arrives noticeably earlier or later than expected. A supplier that misses its lead time twice in a row is a signal to raise safety days or shorten the trust you place in their quoted time, not something to ignore until the next stockout.

Let SteadyShelf do this math for every SKU

Order-by dates per supplier, seasonal forecasts and draft POs for your Shopify store. $29/month after a 30-day free trial.

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