How to calculate reorder points in Unleashed

What a reorder point actually is

Unleashed is very good at telling you what you have on hand right now. What it doesn't tell you, on its own, is when to place the next purchase order. A reorder point closes that gap. It's a single number, set per product, that answers one question: at what stock level do I need to reorder so the new stock arrives before I run out?

Set it too low and you stock out while you wait for the supplier — lost sales, backorders, unhappy customers. Set it too high and you carry more inventory than you need, with cash sitting on the shelf. The reorder point is where those two costs balance.

The reorder point formula

The formula has two parts: the stock you'll sell while you wait for the order to land, plus a buffer for the times demand or delivery runs against you.

The two inputs:

• Lead-time demand — your average daily sales multiplied by how many days the supplier takes to deliver. This is what you'll sell between raising the PO and receiving it.
• Safety stock — the cushion that covers the weeks you sell faster than average, or the supplier ships later than promised.

Getting safety stock right

Most people set safety stock as a flat "keep two weeks spare" rule. That over-protects steady products and under-protects volatile ones. A better approach ties the buffer to how much your demand actually varies and to the service level you want to hit — the share of demand you aim to fulfil straight from stock.

Here Z is the service-level factor (about 1.65 for 95%, 2.33 for 99%) and σ is the standard deviation of your daily sales — how spiky demand is. A product that sells 10 a day like clockwork needs almost no buffer; one that swings between 0 and 40 needs a large one, even at the same average. That's the part flat rules miss.

A worked example

Say you sell a product at an average of 12 units a day. Your supplier's lead time is 14 days. Daily sales vary with a standard deviation of 4 units, and you want a 95% service level (Z = 1.65).

• Lead-time demand = 12 × 14 = 168 units
• Safety stock = 1.65 × 4 × √14 ≈ 25 units
• Reorder point = 168 + 25 = 193 units

So when this product drops to 193 units on hand, you raise the PO. Change any input — a longer lead time, a seasonal jump in demand, a more erratic sales pattern — and the right reorder point moves with it.

Why this is hard to maintain inside Unleashed

The maths isn't the hard part — keeping it current is. Unleashed lets you store minimum and maximum stock levels per product, but those are static numbers you type in by hand. They don't recalculate as demand shifts, they don't know your real supplier lead times, and they don't account for how variable each product is. On a handful of SKUs you can manage that in a spreadsheet. Across hundreds or thousands, it's a full-time job that's out of date the moment you finish it — which is why most catalogues end up with min/max levels someone set once, a year ago, and never revisited.

Automating it with Elanalytics

This is exactly what Elanalytics' replenishment tools do on top of your Unleashed data. Because your sales history and purchase orders are already synced across, it calculates average demand, demand variability and real supplier lead times for every product — then produces a reorder point and a recommended order quantity per SKU, at the service level you choose. It flags which products have already dropped to or below their reorder point, so instead of hunting through the catalogue you get a shortlist of what to buy now. When demand shifts or a season turns, the numbers move with it, rather than waiting for someone to redo the spreadsheet.