Understanding your result
The reorder trigger is rounded upward to a whole unit. Inventory position includes confirmed incoming units and subtracts backorders. A negative difference means position is below the trigger. The status compares quantities only; it does not place an order or choose the order size.
To estimate a buffer under a fixed-lead-time statistical model, use the Safety Stock Calculator and check whether its assumptions fit your demand.
To examine the ordering-versus-holding cost tradeoff, use the EOQ Calculator after deciding when replenishment should be reviewed.
The formula
Demand and lead time must share the same time basis. Use calendar days in both or working days in both. The calculation assumes continuous review and a constant average demand. The trigger is rounded up only after the expected demand and safety stock have been added.
Worked example
At 12 units per day and a seven-day lead time, expected demand is 84 units. Adding 20 safety units gives a trigger of 104. With 75 on hand, 10 incoming, and 5 backordered, position is 80, which is 24 units below the trigger.
How to use this calculator
- Enter average daily demand, supplier lead time, and chosen safety stock.
- Enter stock on hand, confirmed incoming units, and backorders without double-counting commitments.
- Read the trigger and compare inventory position before deciding an order quantity.
Trigger level and purchase quantity answer different questions
The trigger says when to review replenishment. Buying exactly the difference below the trigger may not cover the intended next ordering cycle. Batch sizes, minimum orders, storage constraints, and economics determine how much to buy. The linked EOQ tool explores one simplified order-size model.
Incoming units need timing context
Inventory position recognizes outstanding orders, but a shipment arriving too late will not prevent an earlier stockout. Inspect expected arrival dates and committed demand before relying on a high position. This single-period calculation does not time-phase individual purchase orders.
Choose a buffer deliberately
Safety stock can reflect observed variation or a service policy. It is entered directly here so that the trigger remains usable even when no statistical demand history exists. A statistical buffer calculator makes additional assumptions about variation and lead time; do not mistake those assumptions for certainty.
Assumptions & limitations
What this calculation assumes
- Average demand is constant and incoming quantities are valid commitments.
What to keep in mind
- Does not account for order arrival dates, expiry, periodic review intervals, or supplier minimum quantities.
Common questions
Can inventory position be negative?
Yes. Backorders can exceed on-hand and incoming stock. The negative position remains visible.
Do I use business days or calendar days?
Use whichever matches the demand rate and lead-time measurement. Mixing daily calendar demand with a working-day lead time understates expected demand.