Reorder level

Reorder level is the stock quantity at which a business must place a new purchase order so inventory does not run out before the order arrives. It is set from the usage rate during the supplier's lead time, often plus a safety-stock buffer.

ByHoang TruongUpdated July 5, 2026

See it move

Loading infographic...

A part is used at 60 units a day, and the supplier's lead time is 8 days, so expected usage before the next delivery arrives is 60 × 8 = 480 units. Adding a 100-unit safety stock buffer against late deliveries gives a reorder level of 580 units — the stock quantity that triggers a new purchase order.

Where it fits

SubjectCost AccountingCoreTopicProduct Costing & Cost of Goods ManufacturedCore

The formula

LaTeX

ROL = uL + SS

Variables

$R O L$: Reorder level (units)
$u$: Average usage rate (units per period)
$L$: Lead time (periods)
$S S$: Safety stock (units)

Sets the stock quantity that should trigger a new order, covering both expected usage during the lead time and a buffer against variability.

Check yourself

PracticeCORE

A part is used at 60 units a day. The supplier's lead time is 8 days, and the company keeps a safety stock of 100 units to cover late deliveries. At what stock level should a new order be placed?

Select an answer to check your understanding.