Ever had this happen? Your store's best-selling product suddenly runs out of stock in the middle of a campaign, even though you just restocked last week. Or the opposite—you overstock so much that tens of thousands of baht are tied up sitting in your warehouse.
This problem isn't solved by 'gut feeling'—it's solved with numbers. And at its heart are two formulas that professional sellers around the world use: the Reorder Point and the Safety Stock. This article will walk you through how to calculate the Reorder Point step by step, so you can follow along right in Excel.
Why 'Guessing' Hurts Your Store
When you run out of stock, you don't just lose that day's sales—you lose three things at once:
- Lost sales — customers can't place an order, so they buy from a competitor
- Dropping product ranking — platforms like Shopee/Lazada often reduce the visibility of products with zero stock
- Lower store rating — especially if you accidentally accept an order and can't ship it
On the other hand, ordering too much ties up your capital, drives up warehouse rental costs, and risks products expiring or going out of trend. The solution is to find the balance point using formulas.
What Is Safety Stock and How Do You Calculate It?
Safety Stock is your 'buffer' stock that you keep on hand to handle uncertainty, such as a sudden spike in sales or a supplier delivering later than usual.
The Basic Formula
Safety Stock = (Maximum daily sales × Maximum Lead Time) − (Average daily sales × Average Lead Time)
Here, Lead Time is the number of days from when you place an order with your supplier until the goods arrive and are ready to sell.
Let's look at an example for the product with code SKU-CREAM01 (sunscreen):
- Average sales: 20 units/day — Maximum sales: 35 units/day
- Average Lead Time: 7 days — Maximum Lead Time: 10 days
Safety Stock = (35 × 10) − (20 × 7) = 350 − 140 = 210 units
How to Calculate the Reorder Point Step by Step
The Reorder Point (ROP) is the 'warning line'—when your stock drops to this level, you need to reorder immediately, without waiting for it to run out.
The Formula to Remember
Reorder Point = (Average daily sales × Average Lead Time) + Safety Stock
Continuing with the numbers from SKU-CREAM01:
ROP = (20 × 7) + 210 = 140 + 210 = 350 units
This means the moment your sunscreen drops to 350 units, you must reorder immediately, so the new batch arrives before your stock hits the safety stock level.
Summary Table of the Difference Between the Two Values
| Topic | Safety Stock | Reorder Point |
|---|---|---|
| What it tells you | How much to keep in reserve | When you should order |
| Example | 210 units | 350 units |
Do It in Excel in 5 Minutes
You don't need expensive software. Open Excel or Google Sheets and create columns like this:
- Columns A–F: SKU, Average sales/day, Maximum sales/day, Average Lead Time, Maximum Lead Time
- In the Safety Stock column, enter the formula: =(C2*E2)-(B2*D2)
- In the Reorder Point column, enter the formula: =(B2*D2)+F2 (where F2 is the Safety Stock cell)
- Drag the formulas down to cover every SKU, then set up Conditional Formatting so the remaining-stock cell turns red when it falls below the ROP
Just like that, you have a simple automatic restock alert system.
When Hundreds of SKUs Make Excel Unmanageable
These formulas work well when you have just a few products. But as your store grows to hundreds of SKUs selling across multiple platforms, manually updating sales and stock every day becomes a nightmare—and the 'real numbers' often don't match your spreadsheet.
This is where a fulfillment system like Flash Fulfillment comes in to help. Because when all your stock is in one warehouse and connected to every platform:
- Remaining stock levels update in real time every time there's an order
- The system helps track sales velocity and Lead Time, letting you see trends before you run out
- You see the whole picture through a single dashboard, without switching between multiple screens
Simply put, you still use the same Reorder Point principle, but you let the system track the numbers and handle picking, packing, and shipping for you—freeing up your time to focus on marketing and choosing new products.
Key Takeaways
- Safety Stock = buffer stock to cushion against uncertainty
- Reorder Point = the point at which you must reorder immediately, calculated from average sales × Lead Time + Safety Stock
- Start with Excel, but as your SKUs grow, you should use a system that tracks the numbers in real time
- Review your numbers every time before a major campaign, because sales and Lead Time will change significantly
Want to set up your stock system to be ready for the 2026 peak season without fearing stockouts or overstock? Consult the Flash Fulfillment team to learn more about warehouse management and fulfillment anytime.
Frequently Asked Questions (FAQ)
How often should I review the Reorder Point value?
We recommend reviewing it at least once a month, and every time before a major campaign or sale festival, because average sales and supplier Lead Time often change significantly during those periods.
What should I do if my daily sales fluctuate a lot?
The more your sales fluctuate, the higher your Safety Stock should be, because the formula already uses the difference between maximum and average sales. Try collecting several months of historical data to make your maximum/average figures more accurate.
How is the Reorder Point different from a general low-stock alert?
A guesswork-based alert (e.g. notify when only 50 units are left) doesn't account for Lead Time and actual sales velocity, whereas the Reorder Point is calculated from real data, helping the new batch arrive just in time before stock runs out.
If I have many SKUs, do I have to calculate each one separately?
Yes, because each SKU has different sales and Lead Time. Calculating separately is the most accurate. If you can't manage it yourself, a fulfillment system that connects data in real time can help track every SKU at the same time.
