How to set reorder points for raw materials and parts
A reorder point is the stock level, set per item for raw materials and parts, at which you raise a purchase order. Reorder point = average daily usage × supplier lead time in days + safety stock. Say you use 4 kg of a sheet grade a day, the supplier takes 10 days and you keep 12 kg as a buffer: the reorder point is 4 × 10 + 12 = 52 kg.
By Arunkumar V, CTO · 03 November 2026 · 2 min read
- how to set reorder points
- reorder point formula
- reorder level calculation
- safety stock for small manufacturer
The reorder point formula
In words: work out how much of the item you use on an average working day, multiply by the number of days the supplier takes from order to delivery, then add a safety stock to cover late deliveries and busy weeks. In one line: reorder point = average daily usage × lead time in days + safety stock.
Average daily usage comes from the stock ledger: total issued over the last three to six months divided by working days. Lead time is the real time from raising the purchase order to the goods being received and usable, not the time the supplier quotes.
Worked example with sample figures
The numbers here are examples. Say a shop issued 480 kg of 2 mm mild steel sheet over the last 120 working days, so average daily usage is 4 kg. The last six purchase orders were received 8, 9, 11, 10, 14 and 8 days after ordering, so a sensible lead time is 10 days with 14 as the worst case. Safety stock to cover the worst case is (14 − 10) × 4 = 16 kg; the shop rounds to 12 kg because the 14-day delivery was a one-off.
Reorder point = 4 × 10 + 12 = 52 kg. When stock on hand plus open purchase orders drops to 52 kg, raise an order.
Choosing and reviewing safety stock
There are statistical methods for safety stock, but a small shop can use plain rules and get most of the benefit. Review reorder points for fast-moving items quarterly and the rest twice a year, because usage and lead times drift.
- Items that stop production if they run out get more safety stock than items with a substitute.
- Long or variable lead times need more buffer than short, reliable ones.
- A simple start is the extra usage during the worst lead time you have actually seen.
- Expensive, slow-moving items can have little safety stock and a closer watch instead.
- Review safety stock after any stock-out and after any change of supplier.
How to set a reorder point for an item
- Step 1
List the items that would stop a job if they ran out, and start with those.
- Step 2
Calculate average daily usage from the quantity issued over the last three to six months divided by working days.
- Step 3
Find the real lead time from the dates on recent purchase orders and their receipts.
- Step 4
Decide a safety stock, for example the extra usage during the longest lead time you have seen.
- Step 5
Set reorder point = average daily usage × lead time + safety stock on the item record, and compare it daily with stock on hand plus open orders.
Where ZMOS fits
ZMOS holds reorder points on items in its stock ledger, with live balances per warehouse, and workflow rules can fire on low stock so the buyer is told rather than having to look. Purchase orders and receipts post stock in the same workspace. It is built for sheet-metal, machining and fabrication shops of 10 to 50 people. If you have under a few dozen stocked items and one supplier, a spreadsheet with the formula above will serve until the item list grows. See stock control in ZMOS.
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Inside ZMOS
What is the difference between reorder point and reorder quantity?
The reorder point is the stock level that triggers an order. The reorder quantity is how much you order when it triggers. The point depends on usage and lead time; the quantity depends on the supplier's minimum order and price breaks.
Should open purchase orders count towards the reorder point?
Yes. Compare the reorder point with stock on hand plus quantity already on order. Otherwise you raise a second order while the first is still in transit, and the item arrives twice.
How do I set reorder points for items used only on some jobs?
For irregular items, a reorder point based on average usage either holds too much or runs out. Treat them as buy-to-order: check availability when the work order is planned and order against that job.
What is a minimum stock level?
Many shops use minimum stock level to mean the reorder point. Some use it to mean safety stock, the amount you never want to fall below. Agree which meaning your shop uses and write it on the item record.
See it on your own stock and jobs
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