Reorder quantity: how a suggested order amount is worked out
Reorder quantity is the number of units you put on a purchase order once a SKU has reached its reorder point. This page gives the formula, works it through on a single SKU, and names the inputs no formula can choose for you.
What reorder quantity means
Reorder quantity is the number of units you put on a purchase order when a SKU reaches its reorder point. The reorder point tells you when to order. The reorder quantity tells you how much, and it is a different sum with different inputs.
The common formula is:
- reorder quantity = (daily sales velocity x (lead time days + cover days)) + safety stock - stock on hand - stock already on order
Read it in plain terms. Work out how many units you will sell between placing the order and the next time you plan to order again. Add a buffer for the weeks that run hot. Then subtract what is already sitting in the warehouse and what is already in transit, because you have paid for those units once.
The cover period is the part merchants skip. If you reorder a SKU monthly, you need lead time demand plus a month of demand, not lead time demand alone. Order lead time only and you will be back at the reorder point the week the pallet lands.
A worked example on one SKU
Take one SKU: a 200g jar candle. These numbers are illustrative, not a benchmark.
- Sales velocity: 3 units a day, averaged over the last 30 days
- Supplier lead time: 14 days
- Cover period: 30 days, because you place orders with this supplier once a month
- Safety stock: 20 units
- Stock on hand: 18 units
- Stock already on order: 0
The sum runs like this. Demand across lead time plus cover is 3 x (14 + 30), so 132 units. Add 20 units of safety stock to get 152. Subtract the 18 units on hand and nothing on order, and the reorder quantity is 134 units.
Then the real world rounds it. The supplier ships in cartons of 12, so 134 becomes 12 cartons, 144 units. If the supplier also holds a minimum order of 150 units across the whole PO, that constraint decides the order, not the formula.
Change one input and the answer moves. Hold the same SKU at 6 units a day in November and the quantity roughly doubles. That is why the velocity window you pick matters as much as the formula does, and it is covered in the page on Shopify stock planning for a seasonal spike.
The inputs you choose yourself
Sales velocity window
A 7 day average reacts fast and overreacts to one busy weekend. A 30 day average is steadier and lags a real change in demand. Pick by how volatile the SKU actually is.
Lead time
Count from the day you send the PO to the day the stock is sellable, including customs, receiving and putaway. Suppliers quote production time, not your shelf.
Cover period
How long this order has to last, which is usually your own reorder rhythm with that supplier. Longer cover means fewer POs and more cash tied up in stock.
Safety stock
The buffer for the weeks demand runs above average or the shipment runs late. The more a SKU's weekly sales swing, the more buffer the same service level needs.
Minimum order quantity and case size
Suppliers sell in cartons, pallets and minimums. The formula gives a number; the supplier gives the nearest number you are allowed to buy.
Related terms
Reorder point
The stock level that triggers an order: lead time demand plus safety stock. It answers when, not how much.
Sales velocity
Average units sold per day over a chosen window. Every other number here is built on it.
Lead time
The wait between placing an order and having the stock available to sell. Merchant-supplied, because only you know your supplier.
Days of inventory remaining
Stock on hand divided by sales velocity. A readable way to see which SKU runs dry first.
Safety stock
Buffer stock held against demand spikes and late deliveries.
Economic order quantity
A separate calculation that balances ordering cost against holding cost to find a cost-efficient batch size. It answers a cost question, where reorder quantity answers a coverage question.
Suggested order quantity
The output of the reorder quantity formula as it appears on a reorder list, per SKU, ready to be checked against supplier minimums before you send the PO.
Questions
How do you calculate reorder quantity?
Multiply daily sales velocity by lead time days plus the cover period you want the order to last, add safety stock, then subtract stock on hand and stock already on order. Round the result up to the supplier's carton or minimum order size.
What is the difference between reorder point and reorder quantity?
The reorder point is a stock level that tells you it is time to order. The reorder quantity is how many units that order should contain. You need both: a correct trigger with the wrong order size just moves the problem a few weeks out.
Is reorder quantity the same as economic order quantity?
No. Economic order quantity balances the cost of placing an order against the cost of holding stock to find a cost-efficient batch size. Reorder quantity works out how much stock you need to cover demand until the next order arrives. Many small stores use the coverage sum and let supplier minimums do the rest.
What velocity window should I use, 7, 14 or 30 days?
Match it to the SKU's volatility and the moment you are in. Seven days tracks a sharp change in demand quickly and will chase noise. Thirty days is calmer and slower to notice a new trend. Fourteen sits between the two.
What happens to the formula when a SKU has no sales history?
Velocity is zero, so the formula returns nothing to order, which is correct arithmetic and useless advice for a new product. For a SKU with no history, set the first order by judgement or by a comparable product, then let the sum take over once real sales accrue.
Should stock already on order be subtracted?
Yes, if it will land inside the lead time and cover window. Skipping it is the most common way merchants double-order a SKU: the reorder point fires, the previous PO is still in transit, and two shipments arrive the same week.
Does a suggested order quantity need checking before I send the PO?
Treat it as a starting number. It knows your velocity, lead time and stock position. It does not know that a supplier has raised their minimum, that a line is being discontinued, or that a wholesale order is about to land. Scan the list, adjust the handful of SKUs where you know something the data does not, and send it.