This worksheet from Elmpark Capital Group in Palm Coast, Florida works out an inventory reorder point, safety stock and economic order quantity by hand, with invented figures you replace with your own. It is arithmetic on your numbers, not an offer, and it shows what a partner reading an inventory request looks at.
The Reorder Point Formula, With a Worked Example
Reorder point equals average daily use times supplier lead time in days, plus safety stock. Use units, not dollars, and use the same item or product group throughout.
- Average daily use: units sold or used over a recent period, divided by the days in it.
- Lead time: days from placing an order to having it on the shelf.
- Safety stock: extra units held for slow deliveries or busy days.
- Reorder point: daily use times lead time, plus safety stock.
| Line | Invented figure |
|---|---|
| Average daily use | 12 units |
| Lead time | 9 days |
| Use during lead time | 108 units (12 times 9) |
| Safety stock | 30 units |
| Reorder point | 138 units |
Illustration only, invented figures: a Palm Coast, FL salon supply shelf sells about 12 bottles of a product a day and its distributor takes 9 days. Holding 30 bottles as a cushion, the invented shop reorders when stock falls to 138 bottles (our arithmetic: 12 times 9, plus 30).
Safety Stock and Reorder Point for Trades That Stock Materials
One common safety stock formula is maximum daily use times maximum lead time, minus average daily use times average lead time. It covers the worst recent combination of busy days and slow deliveries.
Illustration only, invented figures: a tile installer’s invented records show maximum daily use of 18 boxes and a longest lead time of 14 days, against averages of 12 boxes and 9 days. The invented safety stock is 144 boxes (our arithmetic: 18 times 14 is 252, minus 12 times 9 is 108), and the reorder point becomes 252 boxes (108 plus 144).
A larger safety stock ties up more cash; a smaller one risks running out mid-job. The right level is a business decision, not a formula output.
Reorder Quantity: How Much to Order Once Stock Hits the Point
The economic order quantity balances ordering costs against holding costs: the square root of (2 times annual demand times cost per order, divided by annual holding cost per unit).
Illustration only, invented figures: annual demand of 4,380 units (12 a day for 365 days), an invented $45 cost per order and an invented holding cost of $2.50 per unit per year give an order quantity of about 397 units (our arithmetic: the square root of 2 times 4,380 times 45, divided by 2.50).
Supplier minimums, case sizes and volume discounts often override the formula; use it as a starting point.
How Palm Coast, FL Owners Read the Result
The reorder point says when to order; the order quantity says how much; together they set how much cash sits in stock. A shop that orders more than it needs ties up money that could cover payroll. Flagler County, FL had 301 retail employer establishments in 2023 (CBP 2023), and every one of them makes this trade-off on each product line.
Salon business loans and retail business loans cover businesses where retail product is a meaningful cost.
Reorder Points for Perishable and Short-Life Stock
Food, flowers, some salon chemicals and dated supplies cannot sit for months. For them, the order quantity is capped by shelf life as well as by cash: never order more than sells before it expires. A kitchen that reorders produce every few days applies the same formula with a lead time of one or two days and a small safety stock.
Illustration only, invented figures: a cafe uses 40 pounds of a product a day with a two-day lead time and keeps 20 pounds in reserve, so its invented reorder point is 100 pounds (our arithmetic: 40 times 2, plus 20).
Where This Worksheet Stops
- It assumes steady demand; a product with uneven sales needs a closer look.
- It works item by item; a store with hundreds of items applies it to the biggest sellers first.
- It cannot predict a supplier delay longer than any in your records.
- It sends nothing anywhere; the arithmetic stays with you.
From Reorder Point to a Funding Request
When the right order quantity is more than the cash on hand allows, inventory financing or a line of credit can cover the order, paid down as the goods sell. Working capital covers a gap that includes payroll as well as stock. A partner reading an inventory request looks at the same numbers: how fast goods sell and how long they sit.
Talk it through at (386) 309-8622, or use the Elmpark request form with the order size and your sell-through pace.
By Elmpark Capital Group · Updated