What This Calculator Calculates
Enter average demand, demand variability, lead time, service level, and optional cost figures to calculate reorder point, safety stock, economic order quantity (EOQ), inventory turnover, and days of inventory on hand. Click Calculate to reveal the formulas, assumptions, and sensitivity tables.
Formulas and Units
Safety stock - covers demand and lead time uncertainty during the replenishment window:
Safety stock = Z × σLT
σLT = √(Lead time × σd² + Average demand² × σLT-days²)
Where σd is the standard deviation of demand per day, σLT-days is the standard deviation of lead time in days, and Z is the standard-normal Z-score for your chosen service level (e.g. Z ≈ 1.645 for 95%, Z ≈ 2.326 for 99%). If lead time is constant (its standard deviation is 0), this reduces to the common simplified formula Safety stock = Z × σd × √(Lead time).
Reorder point - the inventory level that triggers a new order:
Reorder point = (Average demand per day × Lead time in days) + Safety stock
Economic order quantity (EOQ) - the order quantity that minimizes combined ordering and holding cost:
EOQ = √(2 × Annual demand × Ordering cost per order ÷ Holding cost per unit per year)
Inventory turnover - how many times inventory is sold and replaced over a period:
Inventory turnover = COGS ÷ Average inventory value
Days of inventory on hand = 365 ÷ Inventory turnover
- Demand is entered per day, week, or month and converted internally to units/day and units/year (using 365 days/year) so reorder point, safety stock, and EOQ share a consistent time base.
- Lead time is always in days. If your supplier quotes lead time in weeks, multiply by 7 before entering it.
- Standard deviations use the same unit as the value they describe - demand standard deviation in the same period as average demand, lead time standard deviation in days.
- Service level is a probability of not stocking out during the lead time, converted to a Z-score via the inverse standard normal distribution - not a percentage of units in stock.
- Holding cost is annual, per unit.
- COGS and average inventory must use the same period and cost basis.
How to Use the Calculator
- Enter Average demand and choose units / day, units / week, or units / month.
- Optionally enter Demand standard deviation (optional). Blank standard deviations are treated as zero.
- Enter Average lead time (days) and optionally Lead time standard deviation (days, optional).
- Choose Target service level. For a custom value, select Custom... and enter Custom service level (%); it must be at least 50.01% and below 100%.
- Optionally enter both Ordering cost per order and Holding cost per unit per year for EOQ.
- Optionally enter both Annual cost of goods sold (COGS) and Average inventory value for turnover.
- Choose a Currency symbol for cost outputs, then click Calculate.
- Click Reset to clear the form and restore its defaults.
Reading and Saving the Result
After a successful Calculate, the result section shows reorder point, safety stock, EOQ, and inventory turnover. The assumptions table includes converted inputs, intermediate values, orders per year, annual ordering plus holding cost, and days of inventory on hand.
The demand and lead-time sensitivity tables contain Base, -20%, -10%, +10%, and +20% scenarios. Demand scenarios scale average demand and demand standard deviation together while holding lead time constant. Lead-time scenarios scale lead time and lead-time standard deviation together while holding demand constant.
Use Copy result for a plain-text copy, or Download result (.txt) to save the text result.
Validation and N/A Results
- Average demand and Average lead time (days) must be greater than 0.
- Optional standard deviations must be 0 or more; blanks become zero.
- Provide both ordering and holding costs, or leave both blank. Provide both COGS and average inventory, or leave both blank.
- EOQ is calculated only when both ordering cost and holding cost are positive; otherwise it shows
N/A. - Turnover is calculated only when both COGS and average inventory produce a positive calculation; otherwise it shows
N/A. A nonblank average inventory value of zero is rejected.
Limitations and Privacy
The calculator does not forecast demand, use live inventory data, connect to inventory or ERP systems, or guarantee stock availability. Results depend on your entered assumptions and do not capture every source of real-world variability.
The calculator processes entered values in the page browser-side JavaScript. The page also separately loads analytics and records a page-view count, so this implementation does not support a broader claim that nothing is sent to a server.
Frequently Asked Questions
How is the reorder point calculated?
Reorder point = (average demand per day x average lead time in days) + safety stock. It is the inventory level at which a new order should be placed so that stock, on average, does not run out before the replacement order arrives.
How is safety stock calculated?
Safety stock = Z x the standard deviation of demand during the lead time, where the standard deviation combines both demand variability and lead time variability: sqrt(lead time x (demand std dev)^2 + (average demand)^2 x (lead time std dev)^2). Z is derived from the service level you choose - for example, a 95% service level corresponds to a Z-score of about 1.645.
How is the economic order quantity (EOQ) calculated?
EOQ = sqrt(2 x annual demand x ordering cost per order / holding cost per unit per year). It is the order quantity that minimizes the combined annual cost of placing orders and holding inventory, under the classic EOQ model's assumptions of constant demand and costs.
How is inventory turnover calculated?
Inventory turnover = cost of goods sold (COGS) for the period / average inventory value for the same period. It measures how many times inventory is sold and replaced over that period; days of inventory on hand is 365 / turnover for an annual figure.
Does this tool forecast demand or connect to my inventory system?
No. It only calculates from the demand, lead time, service level, and cost figures you type in. It does not forecast future demand, connect to any inventory or ERP system, and it does not guarantee stock availability - actual results depend on how accurate your input assumptions are and on real-world variability the model does not capture.