Reorder point: when should a small business buy again?

Start with a stock record you can use

Choose one product or variant rather than combining items that cannot replace each other. Count usable units, note units already committed to customers, and list confirmed incoming orders with expected dates. Keep damaged, expired or otherwise unusable units out of the usable-stock count.

Use the same unit throughout the calculation. If you sell individual pieces but buy cartons, record both the number of pieces per carton and the conversion you use. A simple worksheet is enough to begin; the first task is making the record consistent, not buying new software.

Calculate a trigger with consistent units

For a stable, continuously reviewed item, start with: reorder point = average daily demand × replenishment lead time in days + buffer units. NetSuite and Amazon both describe this basic relationship. Treat it as a planning model, not a promise that stockouts will be eliminated.

Illustrative example: a shop uses 6 units per day, replenishment takes 8 days and the shop chooses a 12-unit buffer. Demand during lead time is 48 units, so the trigger is 60 units. These are invented teaching inputs, not iEquity Market sales data, delivery times or a recommended buffer.

Source: NetSuite: reorder point definition and formula

Example only: (6 units/day × 8 days) + 12 buffer units = 60 units. This is the review trigger, not the order quantity.

Compare the trigger with stock that will actually be available

Suppose the same shop has 70 usable units and 15 already committed to customers, with no incoming order. Its uncommitted position is 55 units, below the 60-unit trigger. That prompts a purchase review. First check whether those commitments were already included in the demand forecast so they are not counted twice.

Confirmed incoming stock can affect the decision, but timing matters. An order due after you expect to run out cannot prevent the earlier shortage. Check expected arrival dates and existing orders before raising another request. Keep one record of each open order to avoid accidental duplication.

Decide order quantity separately

After deciding that a review is due, choose a quantity that fits the expected demand period, pack sizes, seller’s minimum order and your storage limits. Consider how long the goods remain usable. A cheaper unit price can still leave you with more stock than you can use.

If a seller’s minimum is above your workable quantity, ask whether a smaller trial order, standard specification or different pack is available. Confirm any price change. The minimum-order guide explains which questions to ask; do not assume every independent seller has the same policy.

When does this simple model need adjustment?

Review the inputs after a promotion, seasonal change, repeated late deliveries or a change in how the product is used. A single average can hide uneven demand. If you only check stock weekly, you also need to allow for demand before the next review; the simple continuous-review trigger is not enough on its own.

For a new product with no history, start with an explicitly labelled assumption and a manageable trial quantity. Record actual demand and the full elapsed time until stock becomes usable. Replace the assumptions with observations as they become available.

Source: Amazon: inventory management for small businesses

Make the next purchase request specific

Turn the review into a request with a product specification, quantity in a clear unit, destination and required arrival date. Note whether a partial delivery or substitute is acceptable. Keep the record of why the request was raised so that you can compare the outcome with your plan.

iEquity Market accepts inquiries for review. A submitted request is not a reservation or a confirmed replenishment schedule. Availability, quantity, price and delivery must be agreed for the particular product and seller.