Run out of a best-seller and you lose the sale, and sometimes the customer. Order too early and your cash sits on the shelf. The reorder level is the stock quantity that tells you when to reorder, so new stock arrives just before you run out.
This guide shows the simple formula, worked examples, how to add safety stock, and how to adjust for Malaysian peak seasons.
What is a reorder level?
The reorder level (also called the reorder point) is the stock quantity at which you place a new order. When an item’s stock on hand falls to this number, it’s time to buy.
It depends on three things:
- How fast the item sells (average daily sales)
- How long your supplier takes to deliver (lead time, in days)
- How much buffer you want for surprises (safety stock)
The reorder level formula
Reorder level = (Average daily sales × Lead time in days) + Safety stock
Example 1: a minimart item
A brand of cooking oil sells about 10 bottles a day. The supplier delivers 5 days after you order. You keep 20 bottles as safety stock.
- Stock used while waiting for delivery: 10 × 5 = 50 bottles
- Reorder level: 50 + 20 = 70 bottles
When stock drops to 70 bottles, place the order.
Example 2: a fashion item
A T-shirt (black, size M) sells about 2 a day, and your supplier takes 14 days. Safety stock is 6.
- 2 × 14 = 28, plus 6 = reorder level 34
Set the reorder level for each size and colour separately, because they sell at different speeds.
How much safety stock do you need?
Safety stock covers busier-than-usual days and late deliveries. A simple way to work it out:
Safety stock = (Max daily sales × Max lead time) − (Average daily sales × Average lead time)
For the cooking oil: on busy days it sells 14 bottles, and deliveries sometimes take 6 days.
- (14 × 6) − (10 × 5) = 84 − 50 = 34 bottles of safety stock
- New reorder level: 50 + 34 = 84 bottles
Use more safety stock for best-sellers and items with unreliable suppliers. Use less for slow movers, expensive items and anything that expires.
Reorder level vs reorder quantity
| Reorder level | Reorder quantity | |
|---|---|---|
| Answers | When should I order? | How much should I order? |
| Based on | Daily sales, lead time, safety stock | Sales until the next order, supplier minimum order, shelf space, cash, expiry dates |
| Example | Order when stock reaches 70 bottles | Order 140 bottles (about 2 weeks of sales) |
Adjust for Malaysian peak seasons
- Raise reorder levels before festive peaks (Hari Raya, Chinese New Year, Deepavali, Christmas, school holidays). Daily sales go up, so the reorder level must go up too.
- Add public holidays to lead time. Suppliers and couriers slow down around long weekends.
- Imported goods need longer lead times, and shipping delays are common, so give them more safety stock.
- F&B and perishables: keep reorder levels low and order more often, so stock doesn’t expire.
Common reorder mistakes
| Mistake | Result | Fix |
|---|---|---|
| One reorder level for all items | Best-sellers run out, slow items pile up | Set levels per item, and per size/colour |
| Never updating the numbers | Levels don’t match current sales | Review monthly using your sales reports |
| Ignoring supplier lead time | Stock runs out before delivery | Track how long each supplier really takes |
| Inaccurate stock records | You reorder too late or too early | Keep stock accurate with regular stock takes and barcode scanning |
How inventory software helps
A reorder level only works if your stock numbers are right. Synergy’s inventory management software helps:
- Set a reorder quantity for each item, so you know what to buy before it runs out
- See fast and slow movers in stock reports, to keep your reorder levels realistic
- Purchase orders and goods received, so stock updates when deliveries arrive
- Stock across every outlet in one view, to transfer stock before you reorder
- Every POS sale updates stock immediately
Synergy has served Malaysian businesses since 2011 and has 6,000 clients. It’s sold as a one-time licence and works offline.
Frequently asked questions
What is the difference between reorder level and reorder point?
They mean the same thing: the stock quantity at which you place a new order.
How do I calculate reorder level?
Multiply average daily sales by the supplier’s lead time in days, then add safety stock. For example, 10 units a day × 5 days + 20 safety stock = a reorder level of 70.
What is safety stock?
Extra stock kept as a buffer for busy days and late deliveries, so you don’t run out before the new order arrives.
How often should I update reorder levels?
Review them monthly, and before festive seasons, when sales change sharply.
Should every size and colour have its own reorder level?
Yes. Different variants sell at different speeds, so each needs its own reorder level.
Never run out of best-sellers again. Book a demo of Synergy inventory management software.
