Reorder Point
Demand during lead time plus safety stock. The trigger to reorder.
Definition
The reorder point is the inventory level at which you place a new purchase order. It equals expected demand during your supplier lead time plus your safety stock. When on-hand units hit that number, you order, so replenishment arrives before you run out.
Why the reorder point matters for an FBA seller
Most stockouts are not demand surprises. They are timing failures: the order went in too late to cover the gap between placing it and receiving it. A correctly calculated reorder point removes the guesswork by tying the order trigger to lead time and demand instead of gut feel.
On Amazon the cost of getting this wrong is compounded. A stockout does not just lose sales for the days you are out; it can cost ranking and organic placement that take weeks to rebuild after you are back in stock.
How the reorder point connects to your restock decisions
The reorder point answers when to order. It works together with order quantity, which answers how much. Get the trigger right and you stop firefighting; every PO goes in with enough runway to land before the shelf is bare.
It is not a set-and-forget number. As sales velocity rises or a supplier's lead time stretches, the reorder point has to move up with them. A reorder point built on last quarter's velocity is how a growing SKU stocks out at its best moment.
Related terms
See it applied in Inventory Hero
Inventory Hero turns these inputs into restock recommendations against your real Amazon SKUs.
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