Reorder Point (Critical Stock Level)

The reorder point, also called the critical stock level, is the lowest safe quantity a product can fall to before a new order must be placed. When stock drops to this threshold, it signals that replenishment should begin. The goal is to start the procurement process before the item runs out completely, preventing empty shelves and lost sales. This level is usually calculated from the product's average daily sales rate and the supplier's delivery time (lead time), with a safety margin added to absorb fluctuations in demand.

Setting the right reorder point balances two opposing risks in retail at once: set it too high and capital is needlessly tied up in inventory while shelf space is wasted; set it too low and the product runs out, customers turn to competitors, and trust is damaged. For example, a product that sells about 10 units per day and takes 3 days to arrive from the supplier might have a critical level of at least 30 units plus a safety margin; an order is triggered once stock falls to 35 units.

• Buys time to order before the product runs out.
• Reduces the cost of carrying excess stock.
• Becomes easy to monitor with automatic alert systems.

Tracking the critical level by hand is error-prone; in a tool like Welda Stock you define a threshold for each product and receive an automatic alert when stock falls below it. For broader context, see our guide on how to choose inventory software.