Reorder quantity is how many units you buy when stock reaches the reorder point. It should last until the delivery after this one: order-up-to level, minus stock on hand, minus stock already on order. The popular shortcut, average daily usage × lead time, only tells you when to order, not how much.
This guide works it out for one product, long-life milk at a corner shop in Soweto, in rand. It compares four methods in one table, rounds the answer to whole cases, and shows how to run it with ArmPOS.
What Is Reorder Quantity?
Reorder quantity is the number of units you order each time you restock a product. The reorder point tells you when to order; the reorder quantity tells you how much.
Too small an order means ordering again within days and paying for each delivery. Too large an order ties up cash and shelf space, and risks expiry before it sells.
Reorder Quantity Formula
The reorder quantity brings stock up to a set maximum, the order-up-to level, counting what is already on the way:
Reorder quantity = order-up-to level − stock on hand − stock on order
Order-up-to level = reorder point + (average daily usage × days between orders)
This is the rule the USAID Logistics Handbook gives storekeepers: the maximum stock quantity minus stock on hand, minus any quantity on order. It works the same for a clinic's medicines and a shop's milk.
The formula many pages give, reorder quantity = average daily usage × average lead time, is the lead-time demand. It is the first half of the reorder point, not an order size.
An order of that size sells out while you wait for it, so stock is back at the reorder point the day it lands. At 15 units a day and a 20-day lead time, the 300 units last exactly the 20 days the next delivery takes.
How to Calculate Reorder Quantity in 3 Quick Steps
Three steps give the quantity, and rounding to the case finishes it. For example, a corner shop in Soweto sells 1-litre long-life milk, bought in cases of 12 from a cash-and-carry that delivers.
Step 1: Find Your Average Daily Usage (ADU)
Divide the units sold in the last 30 days by the days the product was in stock. Leave out days at zero and promotion days, because both give a false average.
For example, the shop sold 180 litres in 30 days with no gap: ADU = 180 ÷ 30 = 6 litres a day.
Step 2: Find Your Average Lead Time (ALT)
Lead time is the days from placing the order to having the stock on the shelf. Take it from your own delivery dates, not the supplier's promise.
For example, the cash-and-carry delivers in 2 days on average.
Step 3: Work out the order-up-to level and the quantity
First decide how often you want deliveries. This shop takes one a week, because each delivery carries a fee; then the figures follow in order.
| Figure | Formula | Litres |
|---|---|---|
| Safety stock | ½ × 7 days between orders × 6 | 21 |
| Reorder point | 6 × 2 days + 21 | 33 |
| Order-up-to level | 33 + 6 × 7 | 75 |
| Stock on hand when the alert fires | counted | 31 |
| Stock on order | nothing on the way | 0 |
| Reorder quantity | 75 − 31 − 0 | 44 |
The safety stock follows the USAID handbook's rule of at least half the days between orders. The guide to avoiding overstocking and stockouts compares it with two other ways to size it.
Round it to the case, then check four limits
A supplier sells cases, not litres, so round the quantity to whole cases. The 44 litres make 3.7 cases (44 ÷ 12): round up to 4 cases, 48 litres, for R840 at R17.50 a litre.
Round up for fast sellers, where a gap costs a sale. Round down for slow sellers and anything that expires, then check four limits before you order.
- Supplier minimum. If the minimum order is larger than your quantity, buy it only if it will sell well before it expires. Otherwise, add other products from that supplier to reach the minimum.
- Cash. When cash is short, cut the slow sellers first and keep the best sellers at their full quantity.
- Shelf life. Never order more than will sell well before the expiry date. Long-life milk keeps for months; fresh milk keeps for days.
- Space. Stock that doesn't fit on the shelf or in the store room gets damaged or forgotten.
Buying by the case and selling by the piece is a units question too. Units of measure in inventory explains how to keep both straight.
Four ways to set reorder quantity, compared
Four methods are in common use, and each fits a different kind of product. The table runs all four on the same milk.
| Method | Formula | For the milk | Use it when |
|---|---|---|---|
| Order-up-to (periods of cover) | order-up-to level − on hand − on order | 75 − 31 − 0 = 44, rounded to 48 | Most shop products: the default |
| Fixed quantity | the same amount every time | 4 cases (48 litres) every order | Steady sellers, or when a case, pallet or supplier minimum sets the size |
| Economic order quantity (EOQ) | √(2 × annual demand × cost per order ÷ holding cost per unit per year) | About 41 litres, with the delivery fee shared | Each order has a real cost of its own: imports, a dedicated delivery |
| Lead-time demand | average daily usage × lead time | 6 × 2 = 12 litres | Not as an order size: it is the first half of the reorder point |
A fixed quantity is the order-up-to answer frozen in time. It works until sales change, and then it orders too much or too little every time.
Why the lead-time formula fails
For example, an order of 12 litres placed at the reorder point of 33 sells out in the 2 days it takes to arrive. Stock is back at 33 when it lands, so the shop must order again every 2 days.
If every product were ordered this way, the shop would take 14 deliveries in four weeks instead of 4. At R100 a delivery, that is R1,400 in fees instead of R400.
The EOQ trap: who pays for the delivery
EOQ balances the cost of placing orders against the cost of holding stock, as the Corporate Finance Institute's EOQ guide explains. Its answer depends on the cost per order, and in a small shop one delivery carries many products.
For example, the milk sells about 2,190 litres a year, and holding a litre costs about R5.25 a year (30% of R17.50). If the R100 delivery fee is shared across 50 products, the milk's share is R2.
EOQ = √(2 × 2,190 × 2 ÷ 5.25) = about 41 litres, close to a week of sales. Charge the whole R100 to the milk and EOQ says 289 litres, seven weeks of stock, which is wrong for a shared delivery.
Work out your own holding rate with the holding cost formula. The EOQ guide works the formula in full.
When to Adjust Your Reorder Quantity
Recalculate the quantity whenever one of its inputs moves: daily sales, the days between orders, or the delivery time. Four moments call for it.
During sales spikes
A promotion, or a new building site nearby, raises daily sales for weeks. Raise the order-up-to level for those weeks only and bring it back after, or the extra stock outlives the spike.
During seasonal demand
Use last year's sales for the same weeks, such as December or the back-to-school weeks in January. Every figure in the milk table moves with daily sales, so sales up by half take the order-up-to level from 75 to about 113 litres.
When lead times change
A longer delivery moves the reorder point, not the size of each order. If the cash-and-carry starts taking 4 days, the milk's reorder point rises from 33 to 45 and its order-up-to level from 75 to 87.
The weekly order stays about 42 litres. Only the first order after the change is bigger, by the 12 litres that build the new buffer.
When product velocity shifts
A product that starts selling faster or slower needs a new average from the last 30 days. Recheck your best sellers every month; a slow seller still ordered at its old pace becomes dead stock.
Reorder Quantity vs. Reorder Point (Briefly)
The reorder point is when; the reorder quantity is how much. Both start from daily usage, but only the quantity depends on how often you choose to order.
- Reorder point = average daily usage × lead time + safety stock: 33 litres for the milk.
- Reorder quantity = order-up-to level − on hand − on order: 44 litres, or 48 after rounding.
Reorder points prevent stockouts; reorder quantities keep each order sized to your cash and your shelves.
What a worked-out reorder quantity gives you
A worked-out quantity replaces the guess at the counter with the same calculation every time. Each of the five gains below has a number from the milk example.
Avoid stockouts
An order sized to the next delivery lands before the safety stock runs out. The milk's 48 litres last 8 days, one day longer than the gap between deliveries.
Lower storage costs
Ordering a week at a time keeps at most about 67 litres of milk on hand. The 289-litre order would need four times the shelf space.
Improve cash flow
The weekly order ties up R840 at a time. The 289-litre order would tie up about R5,060 in one product.
Decide from your records, not by feel
Each quantity traces back to three numbers anyone can check: daily sales, delivery days and days between orders. A new staff member who places the order gets the same answer as the owner.
Support growth
The same calculation works for one product or four hundred, and for each branch on its own. Add a row per product to the sheet below, and the weekly order list comes out of it.
A reorder quantity sheet you can copy
Put one product on each row, fill columns A to G, and copy the four formulas down. They work in Excel and Google Sheets.
| A Product | B Daily sales | C Lead time (days) | D Days between orders | E Case size | F On hand | G On order | H Reorder point | I Order up to | J Units needed | K Cases to order |
|---|---|---|---|---|---|---|---|---|---|---|
| Long-life milk 1 L | 6 | 2 | 7 | 12 | 31 | 0 | 33 | 75 | 44 | 4 |
| Sugar 2 kg | 8 | 2 | 7 | 10 | 70 | 0 | 44 | 100 | 0 | 0 |
| Tinned fish 400 g | 5 | 10 | 14 | 24 | 30 | 48 | 85 | 155 | 77 | 4 |
- H2 (reorder point, with half the days between orders as safety stock): =ROUNDUP(B2*C2+B2*D2/2,0)
- I2 (order-up-to level): =H2+B2*D2
- J2 (units needed, counting stock on order): =IF(F2+G2<=H2,I2-F2-G2,0)
- K2 (whole cases): =ROUNDUP(J2/E2,0)
Sugar needs nothing yet: 70 packets is above its reorder point of 44. The tinned fish shows why column G matters: without the 48 tins on order, the sheet would ask for 125 tins instead of 77.
Automating the process in ArmPOS
ArmPOS tells you when to order and what you hold; you decide the quantity and place the order. Five steps connect the sheet to the shop.
- Set each reorder point as the product's Stock Alert. For the milk that is 33, in the Inventory part of the product form (Add your first products).
- Buy by the case, sell by the piece. Make a unit Case built on Piece with Multiply 12, and choose it as the Purchase Unit. Stock is still counted in pieces (Categories, brands and units).
- Fill columns F and G from ArmPOS. Reports › Product Quantity Alerts shows the Quantity left for each product at or below its alert (Reports to check every day). Purchases still marked ordered in Purchases › All Purchases are your stock on order.
- Record the order as a purchase with status ordered. Stock doesn't change yet; when the goods arrive, edit it to received and the stock is added (Record a purchase).
- Import a long order. Purchases › Import Purchases turns a CSV of product codes and quantities into one purchase. Its Status starts on received, so change it if the goods haven't arrived yet (Import purchases).
ArmPOS doesn't calculate the quantity or place orders by itself: the alerts tell you when, and the sheet tells you how much. The steps are the same for a shop in South Africa and for each branch on its own.
Frequently asked questions
What is the reorder quantity formula?
Reorder quantity = order-up-to level − stock on hand − stock on order. The order-up-to level is the reorder point plus daily usage × days between orders; for the milk, 75 − 31 − 0 = 44 litres.
Is reorder quantity the same as EOQ?
No. EOQ is one way to set the reorder quantity, by balancing ordering and holding costs. It fits when each order has a real cost of its own.
Should safety stock be added to the reorder quantity?
No. Safety stock belongs in the reorder point, and the order-up-to level already includes it. Adding it again to every order makes stock creep up.
How often should I recalculate my reorder quantities?
Monthly for your best sellers, and at once when sales, the delivery time or your ordering day changes.
Copy the sheet, fill one row for each of your ten best sellers, and order from it next week. Create a free ArmPOS account to set their reorder points as Stock Alerts, so the alerts list tells you which rows need an order.
