Restaurant reorder point calculator: formula and worked example

This is a written calculation guide, not an interactive calculator. It sets out the formula, works one example through by hand, and covers the places where restaurants, bars, hotels and other venues usually get the number wrong. You can do every step on paper or in a spreadsheet.

What a reorder point is

A reorder point answers one question: at what stock level do I need to order, so the delivery lands before I run out? It is a trigger, not an order size. When stock for an item falls to its reorder point, you place an order; how much you order is a separate decision, covered further down.

The formula

Reorder point = average daily usage × supplier lead time in calendar days + safety stock.

• Average daily usage: how much of the item you use per calendar day, with closed days counted at zero. Take the total used over several weeks from real sales or count data, not from memory, and divide it by every calendar day in that period, not just the days you traded.
• Supplier lead time: the number of calendar days, weekends and closed days included, between placing an order and having the stock usable on site.
• Safety stock: the extra cover that absorbs a busy day or a late delivery. Decide it as a number of buffer calendar days, then convert it to units: safety stock = average daily usage × buffer days.

Keep every figure in the same unit. If usage is in kilograms, the lead-time cover and safety stock must be in kilograms too. Mixing kilograms with cases, or bottles with litres, is the most common way a reorder point ends up meaningless.

A worked example (fictional figures)

The numbers below are invented to show the arithmetic. They are not a benchmark for any real venue or ingredient.

1. Average daily usage of an item: 4kg per calendar day.
2. Supplier lead time: 2 calendar days from order to usable stock.
3. Lead-time cover: 4kg × 2 days = 8kg.
4. Safety stock: you want 1 buffer day, so 4kg × 1 day = 4kg.
5. Reorder point: 8kg + 4kg = 12kg.

So when the stock position for that item reaches 12kg, you order. If usage and lead time behave as expected, the delivery arrives with roughly the 4kg of safety stock still in hand.

Compare it with your stock position, not just the shelf

The figure you check against the reorder point should be your inventory position, not simply what you can see on the shelf:

Inventory position = usable stock on hand + confirmed incoming orders − stock already committed.

• Usable on hand means stock you can actually serve: exclude anything damaged, out of date or set aside for disposal.
• Confirmed incoming means orders the supplier has accepted and not yet delivered. Without this, you will order the same thing twice while the first order is still on its way.
• Committed stock means quantities already promised, such as a booked function, a banquet or a transfer to another site.
• Count each commitment once. If a function's quantity is already built into your average daily usage, subtracting it again as committed stock double-counts it and triggers orders too early.

Reorder point is not the order quantity

The reorder point tells you when to order. The order quantity tells you how much. A common approach is to order up to a target level, often called a par level: order quantity = par level − inventory position. Using the fictional example, if the item's par is 20kg and the position is 12kg when you order, you order 8kg, then round for pack sizes as described below.

If you order on fixed days

Many venues do not watch stock continuously. They check and order on set days, using the actual calendar-day gap until the next ordering opportunity. In that case the stock you hold after an order has to last until the next order can arrive, so cover the review interval as well as the lead time:

Order-up-to level = average daily usage × (review interval in calendar days + lead time in calendar days) + safety stock.

With the fictional 4kg per day, a 3-day gap between ordering days, a 2-day lead time and 4kg of safety stock, that is 4kg × (3 + 2) + 4kg = 24kg. On each ordering day you order the difference between 24kg and your inventory position.

Adjustments the formula does not make for you

• Shelf life: a reorder point that holds more stock than you can use before it spoils is a waste problem, not a safeguard. For short-life items, keep safety stock small and order more often.
• Order cut-offs: if a supplier's cut-off is 2pm for next-day delivery, an order placed at 3pm has a longer lead time. Measure lead time from when you really place orders.
• Weekends and closed days: a supplier that does not deliver on Sunday turns a Saturday order into a longer lead time. Count calendar days until the stock is usable, not just supplier working days, and multiply them by the same calendar-day usage figure. Because that figure averages in closed days at zero, a lead time that falls only on your busiest trading days can need extra buffer days.
• Uncertain deliveries: if a supplier often arrives late or short, add buffer days for that item rather than raising every reorder point across the board.
• Case packs and minimums: round the order quantity to whole cases or the supplier's minimum, and remember that rounding up adds stock you then need to use in time.
• Changing usage: recalculate after menu changes, seasonal swings and events. A reorder point built on last quarter's sales goes stale quietly.

Where to start

Do not set reorder points for every line at once. Start with the items that make up most of your spend or that cause the most trouble when they run out, check the results after a few order cycles, and adjust the buffer days item by item.