Buying and Reorders

Reorder Point Formula: When to Reorder a Bestseller Without Stocking Out

Waiting for a stockout loses sales, and ordering too early ties up cash in stock that may not sell through. This guide gives buyers a working reorder point formula, shows how to feed it with real sales velocity, pipeline stock and lead time, and builds a worked hoodie example. It pairs with our guides to which styles deserve a bigger buy and test and scale.

When to Reorder a Bestseller: What the Reorder Point Formula Decides

A hoodie is selling 250 units a week, there are 12 weeks of cover on the shelf and another 1,000 units are in transit, and the Monday meeting needs a yes or no on the repeat. Order now and you may pay for stock the season cannot absorb. Order later and the style can run out while the repeat is still on the water. The reorder point formula turns that argument into a number: the level of stock, counting everything already on order, at which a repeat has to be placed so that it lands before the shelf is empty.

The discipline is in the inputs: a repeat takes the full replenishment lead time to arrive, so you order while stock can survive that wait, plus a buffer for faster sales or later deliveries.

2,205 unitsIllustrative reorder point for a hoodie selling 250 a week with an 8-week lead time
4,000 unitsIllustrative inventory position: 3,000 on hand plus 1,000 in transit
16 weeksForward cover when the position is divided by weekly sales
Week 7When the illustrative base plan reaches its weekly-review trigger

Those tiles come from the worked example later in this guide and are illustrative, not benchmarks. The structure matters more than the values.

The four steps of a reorder decision

  1. 1Measure velocity and coverNet weekly sales from in-stock weeks, then weeks of cover on hand and on order.
  2. 2Add up the lead timeDecision to goods available to sell, including every wait in between.
  3. 3Size the safety stockUse demand variability and lead-time variability, not a flat rule of thumb.
  4. 4Run two scenariosTest a stronger and a weaker demand path against the season end.

A framework for the decision, not a fixed process. Programmes with fabric held in advance or air freight options will weight the steps differently.

The Reorder Point Formula, Variable by Variable

In its standard inventory form the reorder point is the demand you expect during the replenishment lead time plus safety stock. It is compared with the inventory position, which is stock on hand plus stock on order and in transit, minus anything already committed to orders or allocations that will not be available to sell. When the position falls to the reorder point, you place the order.

The formula

Reorder point = (average weekly sales x lead time in weeks) + safety stock. Inventory position = on hand + on order + in transit. Place the order when the inventory position is at or below the reorder point.

Comparing the reorder point with on-hand stock alone is the most common error, because it ignores units already coming. The table defines each variable and where it usually goes wrong.

Reorder point formula: inputs and how they go wrong

InputDefinitionCommon error
Average weekly sales (velocity)Net units sold per week over a stated window, from weeks when the style was in stockAveraging weeks that include stockouts, which understates demand
Replenishment lead timeWeeks from the decision to order until the goods are available to sellQuoting production time only and forgetting approval, transit and receiving
Safety stockBuffer for demand and lead-time variability, set for a chosen service levelA flat "two weeks" rule that ignores how volatile the style is
Inventory positionOn hand plus on order plus in transit, less committed or reserved unitsCounting only the stock in the warehouse

Definitions follow standard inventory practice. Retailers differ on how they treat reserved and returned units, so confirm your own definitions before building a template.

Step 1: Calculate Weekly Sales Velocity and Weeks of Cover

Sales velocity is units sold per week, but the figure you need is net demand: sales adjusted for returns and for weeks when stock was short. A style that sold out on Thursday shows low sales for a week with unmet demand behind them. Use in-stock weeks where you can, and state the window, because the choice moves the answer.

Illustrative eight-week sales history for one hoodie colour

MeasureValueHow it is calculated
Weekly units, weeks 1 to 8190, 310, 240, 200, 280, 230, 300, 250Illustrative net sales, all weeks in stock
Eight-week average250 unitsSum of 2,000 divided by 8 weeks
Weekly standard deviationAbout 44 unitsSample standard deviation of the eight weeks, rounded
Effect of window choice120 more units over the lead timeA last-four-weeks average of 265 (1,060 / 4) against 250, times 8 weeks

Illustrative data built for this example. Short windows react faster to a trend but are noisier; long windows are steadier but lag a fading or accelerating style.

Weeks of cover is available stock divided by forecast weekly sales. State which stock you mean. Cover on hand is 3,000 divided by 250, which is 12 weeks. Forward cover, which also counts the 1,000 units in transit, is 4,000 divided by 250, which is 16 weeks. The decision uses forward cover, because the units in transit will be there before the new order lands. Check how your trading report defines it; our guide to reading Monday trading reports covers how those columns are built.

Adjust for known changes such as a promotion, a price move or a seasonal turn: history tells you what happened, and the reorder point needs what will happen over the next lead time.

Step 2: Pipeline Stock and Total Replenishment Lead Time

Pipeline stock is everything ordered but not yet available to sell: units in production, in transit and in customs or goods-in. It counts towards the inventory position only if you trust its arrival date, so ask for the confirmed ex-factory date and the booked sailing or flight, not the original plan.

Replenishment lead time starts when you decide, not when the purchase order is signed, and ends when the goods can be sold, not when they leave the factory. The timeline splits a hypothetical eight weeks into its usual stages; each programme must re-time it. Our clothing production lead times guide explains what drives each stage.

Illustrative 8-week replenishment lead time

  • Week 1: decision and confirmationReorder approved, quantities by colour and size agreed, purchase order confirmed, any approvals needed on the existing bulk standard.
  • Weeks 2 to 4: fabric and trimsFabric and trims are booked or released from reserved stock. If the yarn or fabric must be made again, this block is where lead time grows.
  • Weeks 5 to 6: cut, sew, finish and packProduction on the confirmed standard, with inline and final inspection before release. See how to manufacture clothing in bulk for the stages.
  • Weeks 7 to 8: transit and receivingBooking, shipment, customs, delivery to the warehouse and goods-in, so the stock is available to sell.

Hypothetical split that sums to the 8 weeks used in this guide. Do not use it as a typical lead time; ask each factory and forwarder for current, confirmed timings.

Shortening the lead time lowers the reorder point directly, because less demand falls inside it. That is why buyers reserve fabric or capacity for proven winners, at the price of commitment, so reserve only what the sales data supports.

Step 3: Set Safety Stock Based on Demand Variability

Safety stock covers the gap between forecast and reality during the lead time. The standard calculation multiplies a service-level factor, called z, by the standard deviation of demand over the lead time. For weekly demand with a standard deviation of sigma, and a lead time of L weeks, the standard deviation over the lead time is sigma multiplied by the square root of L. Using the example above, 44 multiplied by the square root of 8 is about 124 units, and a z value of 1.645 gives 205 units of safety stock.

The z value is a standard normal-distribution factor: 1.28 corresponds to a 90 per cent chance of not stocking out during the lead time, 1.645 to 95 per cent and 2.33 to 99 per cent. These are conventions, not recommendations. Choose the level from the cost of a stockout against the cost of carrying stock, higher for proven core styles than for uncertain newness.

Illustrative safety stock by service level (8-week lead time)

Service levelz valueDemand variability only (units)With 1-week lead-time variability (units)
About 90 per cent1.28159357
About 95 per cent1.645205459
About 99 per cent2.33290651

Illustrative: weekly demand of 250 units, standard deviation of 44 units, lead time of 8 weeks, lead-time standard deviation of 1 week. The combined formula is z multiplied by the square root of (L x sigma squared + weekly sales squared x lead-time sigma squared).

Read the last column twice. Allowing for a lead-time standard deviation of just one week more than doubles the buffer in this example, which is why late deliveries hurt more than a noisy sales line. If your factory's on-time record is patchy, the cheapest safety stock is often a better delivery plan, not more units; see test and scale for how capacity can be agreed before a winner is known.

Worked Example: The Reorder Point Formula for a Hoodie Selling 250 a Week

Here is the reorder point formula applied to one hoodie colour. All inputs are illustrative assumptions, set out in the table, and the arithmetic is shown in full so you can swap in your own numbers.

Illustrative inputs and the reorder point calculation

LineValueWorking
Average weekly sales250 unitsEight-week average from Step 1
Replenishment lead time8 weeksDecision to available to sell (assumed)
On hand today3,000 unitsAssumed
In transit, arriving week 41,000 unitsAssumed, confirmed booking
Inventory position4,000 units3,000 + 1,000
Demand during lead time2,000 units250 x 8
Safety stock (about 95 per cent)205 units1.645 x 44 x square root of 8
Reorder point2,205 units2,000 + 205
Reorder point in weeks8.82 weeks2,205 / 250
Season endWeek 20Assumed, counted from today

All figures illustrative and rounded; the example does not represent any real style, sales rate, supplier lead time or result.

The position of 4,000 units is above the reorder point of 2,205, so the answer today is not yet. The position falls by 250 units each week, so it reaches the reorder point after about 7.2 weeks. Of the 2,205 units, 2,000 (90.7 per cent) is plain demand during the wait and only 205 (9.3 per cent) is buffer, so the lead time input matters far more than the safety stock.

Weekly Review: Why the Trigger Should Sit Above the Reorder Point

A buying team reviews the numbers weekly, so if the position crosses the reorder point on Tuesday, nothing happens until the next review. The fix is to raise the trigger by one review period of demand, so the order goes in at the last review before the position would drop below the reorder point.

Illustrative weekly reviews for the base plan

WeekOn handInventory positionWeeks of forward coverAction
43,0003,00012.0Hold
52,7502,75011.0Hold
62,5002,50010.0Hold
72,2502,2509.0Order now
82,0002,0008.0Past the trigger

Illustrative. The 1,000 units in transit arrive in week 4, so on hand rises while the position does not. Trigger = reorder point of 2,205 plus one week of sales (250) = 2,455 units.

In week 7 the position is 2,250, which is at or below the 2,455 trigger, so the order goes in. It lands in week 15, when the shelf holds 250 units, about one week of sales. Had the team waited for the strict reorder point of 2,205, the next review is week 8 with a position of 2,000, and the order would arrive in week 16 with the shelf empty. The 205-unit safety stock was consumed by the review gap alone.

Step 4: Model Optimistic and Conservative Scenarios Against the Season End

One forecast is a single bet. Run the same formula against a stronger and a weaker demand path, and read each against the season end, because a repeat that lands after the selling window is stock without a selling season. The latest useful order week is the season end minus the lead time, here week 12.

Illustrative scenarios for the same hoodie

MeasureOptimistic: demand risesBaseConservative: demand fades
Weekly sales300250180
Demand during 8-week lead time2,4002,0001,440
Reorder point (safety stock held at 205)2,6052,2051,645
Trigger (reorder point plus one week)2,9052,4551,825
Order placed at week4713: too late
Lands at week121521: after season end
Order quantity to reach season end2,0001,000No reorder
Units left at week 2000400 (markdown exposure)

Illustrative. Season end is week 20. Order quantity = weekly sales x weeks from arrival to season end, less stock on hand at arrival. Safety stock is held constant for comparison; recalculate it for each demand path in real use.

The scenarios say something a single forecast cannot. If demand rises, the order has to go in at week 4 and be twice the base quantity; if demand fades, the prudent response is no order at all. The chart shows each trigger week against the last useful order week, and that gap is the margin for judgement.

Week the weekly-review trigger is reached (illustrative)

Weeks from today

Optimistic, 300 a weekWeek 4
Base, 250 a weekWeek 7
Latest useful order weekWeek 12
Conservative, 180 a weekWeek 13

Illustrative scenarios from the table above, not a forecast. A scenario whose trigger week is later than the latest useful order week should not trigger a reorder in this season.

There is a second stress test: a fade that starts after the order is committed. If the base order of 1,000 units is placed in week 7 and demand then drops to 180 a week, the season ends with 910 units still in stock. That is the exposure to price before approving a repeat, and the reason for staged repeats on uncertain styles; our guide to reducing overproduction without reducing sales goes further.

The Cost of Ordering Too Late or Too Early

A late order appears as a stockout and lost sales in the trading report. An early order shows up weeks later as slow cover, markdown pressure and cash tied in stock that cannot yet sell. Compare both in the same units before choosing a trigger.

Illustrative cost of timing errors for the base plan

TimingWhat happens in this exampleWhere the cost shows up
Reorder at the weekly trigger (week 7)Lands in week 15 with 250 units on the shelf; no stockoutLittle visible cost if lead time holds
Reorder when forward cover reaches zero (week 16)Lands in week 24, after the week-20 season end; weeks 16 to 20 are lostLost sales of 1,000 units in-season (4 weeks x 250)
Reorder at the trigger, then a 3-week delayLands in week 18; shelf empty from week 16Lost sales of 500 units (3 weeks x 250, less 250 on the shelf)

Illustrative arithmetic on the assumed base plan. Assumes lost sales are not recovered later and customers do not switch to another style; real behaviour differs.

To turn lost units into money, multiply by gross profit per unit, which is selling price excluding VAT minus cost. At an assumed GBP 25 per hoodie, 500 lost units is GBP 12,500 of gross profit. Gross margin is that profit divided by the selling price excluding VAT; markup divides it by cost instead, so do not mix the two.

Reorder Point Formula KPIs: Stock Cover, Lost Sales and Reorder Lead Time

Three measures keep the formula honest after the first decision. Define each before the meeting, because the same word can mean different things in different systems, and state the formula in the template so everyone reads the same number.

KPIs to monitor on every repeat decision

KPIDefinition and formulaWhat it tells youWatch for
Stock cover (weeks of cover)Available stock divided by forecast weekly sales; state whether it is on hand or includes stock on orderHow long the shelf lasts against the lead timeCover at or below lead time plus review period means a repeat is due now
Lost salesEstimated demand not served during stockout weeks: forecast weekly sales x weeks out of stock, adjusted for any units backorderedThe cost of ordering late, in units and in gross profitIt is an estimate; compare with in-stock rate and customer comments
Reorder lead timeWeeks from the order decision to the goods being available to sell, measured on actual ordersWhether the lead time you plugged into the formula is realA rising average or a wide spread means safety stock is too low

Definitions follow common retail planning practice but vary by retailer. Confirm whether your cover figure uses on-hand stock, available-to-sell stock or includes the pipeline.

Compare planned and actual reorder lead time after every repeat. If actuals drift upwards, the formula is still right but the input is stale, and the reorder point must move before the next stockout.

Decision Rules: What to Do and What Evidence Would Change It

Turn the calculation into a rule your trading team can apply in a few minutes, and write down what would make you override it.

A working reorder decision checklist

  • Velocity is net demand from in-stock weeks, with the window stated and a forecast adjustment for any known change.
  • Position includes confirmed pipeline only, with ex-factory and arrival dates checked this week.
  • Lead time runs from decision to available to sell, and is checked against the last few actual repeats.
  • Safety stock is set per style for a stated service level, with lead-time variability included.
  • Trigger is the reorder point plus one review period of sales.
  • Both scenarios are run against the latest useful order week, and the residual stock is priced.
  • Fabric, trims and capacity for the repeat are confirmed with the factory before the order is released.

A starting template. Add your own rules on returns, size curve and colour split before it goes into a trading pack.

Evidence that should change the decision: a rise in returns on the style, a size curve selling unevenly so that some sizes stock out while others sit, or a lead time the factory cannot confirm. Check the minimum quantity before sizing the order, since our guide to MOQ in clothing manufacturing shows how minimums can force a repeat larger than the formula suggests.

For a hoodie, fleece lead times and seasonality deserve their own treatment, including on-order units and season-end markdown risk. Our hoodie reorder calculation goes deeper there, while this page covers the general method. To decide whether a style is a winner at all before you apply the formula, start with which styles deserve a bigger buy.

A final question for your next trading meeting: if the style you are watching sold at your conservative rate from today, would the repeat you are about to approve still land inside the selling window, and what would you do with the units left over?

How Ruhrose Approaches Repeat Orders

Ruhrose develops hoodies, jersey, denim and woven casualwear for UK buyers, with development and production in Bangladesh. We sample before bulk, and on a repeat we start from the same questions as this guide: the lead time from your decision to goods available to sell, the fabric and trim position, and the capacity available for a winner. We do not quote lead times or minimums in guides because they depend on the fabric, the colour and the programme, so we confirm them for your specific style. If you are testing a style first, the test and scale model sets out a risk-reduction approach, not a risk-free one, and a repeat plan can be agreed alongside the first order.

FAQs

The reorder point is average weekly sales multiplied by the replenishment lead time in weeks, plus safety stock. You compare it with the inventory position, meaning stock on hand plus on order and in transit. When the position falls to the reorder point, you place the repeat order.
Divide available stock by forecast weekly sales. State whether the stock is on hand only or includes units on order. For example, 3,000 units on hand and 250 units a week gives 12 weeks of cover on hand. Including 1,000 in transit gives 16 weeks of forward cover.
It depends on how variable demand and delivery are, and on the service level you choose. A common method multiplies a z factor by the standard deviation of demand over the lead time. Add lead-time variability if deliveries are not reliable. Set it per style, higher for proven core styles.
Use total replenishment lead time: from the decision to order until the goods are available to sell. That includes approvals, fabric and trim, production, transit, customs and goods-in. Measure it from recent actual repeats instead of relying on the quoted production time.
Only if the repeat can land with enough selling weeks left to clear it. Subtract the lead time from the season end to find the latest useful order week. If your trigger falls after that, ordering creates residual stock and markdown exposure rather than sales.
Lost sales are an estimate: forecast weekly demand multiplied by the weeks out of stock, adjusted for any units customers backordered. It is not recorded directly. Use the in-stock rate, waiting-list requests and customer comments to check the estimate before relying on it.

Planning repeats on a style that is starting to move?

Tell us the style, the quantity you tested and the weeks you have to the end of the season. We will talk through what a repeat could look like, and sample first.