When to reorder: lead time, stockout risk and a practical reorder point
Reorder before stock runs out, without turning every warning into a large purchase. Start with a clear demand measure, actual supply lead time and accurate available quantity, then add a buffer that reflects uncertainty. A reorder point asks when to review buying; order quantity asks how much. Confusing them can leave…
Reorder before stock runs out, without turning every warning into a large purchase. Start with a clear demand measure, actual supply lead time and accurate available quantity, then add a buffer that reflects uncertainty. A reorder point asks when to review buying; order quantity asks how much. Confusing them can leave you without goods or turn an estimate into slow-moving inventory.
Define demand in physical units
With COD, placed orders are not identical to completed sales. Begin with delivered product units and monitor open orders and reservations separately. A bundle taking two pieces from the shelf counts as two units, not one order. Gifts consume stock as well. Do not combine every size when only one combination is running out.
Select a period you can interpret. An item unavailable for half the period has a different history from one offered throughout. Record stockouts, price changes and advertising changes. No sales cannot fully establish no demand when customers were unable to buy.
Measure supplier lead time from the right starting event
Record when you requested the purchase, when the supplier accepted and when usable goods arrived. Lead time may be longer than transit alone. Include inspection where goods cannot be offered immediately. Use recent experience and confirmed conditions rather than treating the fastest previous delivery as a permanent promise.
Ask what has changed: production to order, missing colours or non-dispatch days. If timing varies, do not hide it behind an impressively precise average. Review the uncertainty, buffer and funding requirement instead of relying on a reassuring number.
Separate on-hand, available and incoming goods
Physical stock can include reservations and isolated units. Expected goods are not available today. The Shopify inventory-state documentation explains this distinction; how your own tool implements it needs separate checking. Similar column names do not establish identical behaviour.
For every incoming quantity, check its reference, confirmed date and whether it arrives before existing stock runs out. An overdue or undated purchase should not create false confidence. Avoid counting one batch twice because it appears in both purchasing and transport records.
A worked reorder-point and quantity example
A fictional shop delivers twenty-eight units across fourteen representative days: two units per day. Supplier lead time is seven days and the chosen buffer is three days. The simple reorder point is 2 × (7 + 3) = 20 units. Physical stock is 24 with six reserved, leaving 18 available. Without confirmed incoming goods, being below 20 justifies a purchasing review.
| Input | Teaching value |
|---|---|
| Daily rate | 28 ÷ 14 = 2 |
| Lead time plus buffer | 7 + 3 = 10 days |
| Reorder point | 20 units |
| Available after reservations | 24 − 6 = 18 |
| Target including 14 days after arrival | 2 × (7 + 3 + 14) = 48 |
| Purchase in this scenario | 48 − 18 = 30 units |
At an illustrative 12 TND purchase cost, thirty units require 360 TND before other expenses. These assumptions do not guarantee future sales. The target of 48 already includes lead-time consumption, so do not add the seven days again.
Change the decision when goods are already incoming
Eight units confirmed for arrival in five days may change purchase timing. The planning position becomes 18 + 8 = 26 before another purchase. Check that arrival is earlier than expected stockout, then decide whether buying is needed now. Do not automatically order thirty as though the incoming batch did not exist.
If those units arrive in twelve days, current availability covers only nine theoretical days. They cannot close the gap before arrival. Ask about bringing part of the delivery forward or revising the customer offer without creating an unclear preorder. Check the supplier minimum, pack size and cash before rounding any purchase quantity.
Check estimate quality before taking action
- Measure units rather than order count alone.
- Separate reservations, isolated stock and incoming goods.
- Review the period and out-of-stock days.
- Confirm supplier timing and minimums.
- Recalculate when demand, price or terms change.
Matjri can help organise product and order information alongside a purchasing decision record. If replenishment suggestions are available in your account, understand their assumptions before acting. A suggestion is neither an instruction already sent to a supplier nor a sales guarantee.
The Shopify receiving documentation provides an operational example of separating expected and received stock. Keep actual dates and quantity differences for every batch to improve lead-time estimates rather than repeatedly using an outdated promise.
Questions about replenishment
What about a new product without history?
Two orders do not produce a dependable average. Begin with a manageable trial and manual review of supplier terms and cash, then gather enough evidence before relying on a numerical rule.
Is a three-day buffer suitable for everyone?
No. It is an example assumption. Adapt it to variation, stockout consequences and available money, using observed events rather than treating one number as universal.
What should I do first?
Choose one item and calculate delivered units, available stock and lead time. Record why you buy or wait, then compare that decision with subsequent receipts and sales.