Reorder point and safety stock for small inventories
Estimate when to reorder and how much buffer is needed for demand and lead-time variation.
The useful formula
A practical safety-stock estimate is maximum daily demand × maximum lead time minus average daily demand × average lead time. Reorder point adds average lead-time demand to safety stock.
What belongs in the inputs
Use selling days consistently, remove exceptional stockouts, and review supplier lead times from received purchase orders rather than promises alone.
How to use the result
Compare the reorder point with stock on hand plus confirmed incoming stock. Recalculate when demand, suppliers, seasonality, or service targets change.