What is the difference between reorder point and reorder quantity?

The reorder point is a stock level: when the quantity on hand drops to it, you place an order. The reorder quantity (often the EOQ) is how much you order at that moment. One answers when, the other how much. A reorder point of 380 and an EOQ of 775 means order 775 units each time stock falls to 380.

What is the formula for economic order quantity?

EOQ = square root of (2DS / H), where D is annual demand in units, S is the cost of placing one order and H is the cost of holding one unit for a year. With D = 12,000, S = ₹500 and H = ₹20, EOQ = sqrt(12,000,000 / 20) = sqrt(600,000), about 775 units. It balances ordering cost against holding cost.

How do I estimate holding cost per unit?

Add up what it costs to keep one unit for a year: interest on the money tied up (your CC or OD rate is a fair proxy), a share of rent and electricity for the space, insurance, and expected loss from damage or expiry. Most small businesses land between 15 and 25 percent of the item's cost price. A ₹200 item at 20 percent has H = ₹40.

What lead time should I use if the vendor is unreliable?

Use the typical lead time in the ROP formula and put the unreliability into safety stock, not into lead time. If deliveries usually take 7 days but sometimes 10, calculate ROP with 7 days and set safety stock to cover the extra 3 days of demand. That way you are not permanently overstocked to guard against an occasional delay.

Does EOQ work for seasonal or festival demand?

Not directly, because EOQ assumes demand is roughly steady through the year. For Diwali, wedding season or summer products, calculate a separate EOQ using the season's demand rate and lead time, raise the reorder point before the season and bring both down afterwards. For one-off promotions, plan the quantity from the campaign forecast instead.

Should I ignore EOQ when the vendor offers a bulk discount?

Compare total cost at the EOQ against total cost at the discount quantity: purchase cost plus ordering cost plus holding cost for a year. A 3 percent discount on a ₹1 lakh annual purchase saves ₹3,000; if the larger lot raises holding cost by more than that, the discount is not worth it. Expiry-prone goods rarely justify the bigger lot.

Reorder Quantity Calculator

Calculate reorder point and economic order quantity for inventory planning. Free.

Free · no login neededMade for India · ₹, GST, UPI, WhatsApp

In short

A reorder quantity calculator works out two numbers for an item: the reorder point (when to order) and the economic order quantity (how much to order). Reorder point is daily demand multiplied by lead time plus safety stock; EOQ is the square root of 2DS divided by H. VyaparKit's calculator takes your demand, lead time and costs and gives both, free and without login.

Reorder point

Average daily sales (units)

Supplier lead time (days)

Safety stock (days)

Economic order quantity

Annual demand (units)

Cost per order

₹

Holding cost per unit per year

₹

Reorder point

200 units

Place a new order when stock falls to this level

Economic order quantity604 units

Orders per year13

Reorder point formula

ROP = Daily sales × Lead time + Safety stock.

EOQ formula

EOQ = √(2 × Annual demand × Order cost ÷ Holding cost per unit).

About the reorder quantity calculator tool

Every business that holds stock answers two questions for each item: at what quantity should I order again, and how much should I order each time. Order too late and you lose sales; order too much and cash sits on the shelf, which for a small Indian business often means paying interest on a cash credit limit to fund stock that is not moving. The reorder point (ROP) answers the first question and the economic order quantity (EOQ) answers the second. Both are standard formulas taught in every commerce course, but almost nobody actually runs them for their own shop.

Working it out by hand, people either guess a round number or copy last year's order. The formulas are simple but easy to get wrong: mixing daily and monthly demand, forgetting that lead time includes the vendor's dispatch delay and not just transit, or using the purchase price as the holding cost. The calculator asks for each input in plain terms (daily demand, lead time in days, safety stock, annual demand, cost per order, holding cost per unit per year) and shows the result with the formula and the numbers substituted, so you can check it and explain it to a partner or banker.

Once you have the numbers, put them to work. Save the reorder point as the low-stock level on the item in VyaparKit so the Low-stock Calculator flags it automatically, and use the EOQ as the quantity on your next Purchase Order. Invoices and purchase bills keep the stock quantity current, so the flag fires at the right time.

How to calculate reorder point and EOQ

1
Enter daily demand
Take a recent period's sales of the item from your invoices and divide by the number of selling days. If you sold 1,200 units in 30 days, daily demand is 40.
2
Enter lead time and safety stock
Lead time is the number of days from placing the order to the goods being on your shelf, including the vendor's processing. Safety stock is the buffer you keep for demand spikes or a late delivery; a few days of demand is a common choice.
3
Read the reorder point
The calculator shows ROP = daily demand x lead time + safety stock. This is the stock level at which you place the next order. Save it as the item's low-stock level in VyaparKit.
4
Enter annual demand and costs for EOQ
Annual demand D is units per year. Ordering cost S is what each order costs you in phone calls, freight and handling. Holding cost H is the yearly cost of keeping one unit in stock (interest, storage, spoilage), often 15 to 25 percent of its cost price.
5
Read the EOQ and orders per year
EOQ = square root of (2 x D x S / H). The calculator also shows how many orders that means per year and the days between orders. Round to the vendor's pack size and use it on your purchase order.

The formulas, with a worked example

Reorder point (ROP) = daily demand x lead time in days + safety stock.
Economic order quantity (EOQ) = sqrt(2 x D x S / H), where D is annual demand in units, S is cost per order in rupees and H is holding cost per unit per year in rupees.
Worked example: an item sells 40 units a day, the vendor takes 7 days, and you keep 100 units as safety stock. ROP = 40 x 7 + 100 = 380 units. Reorder when stock falls to 380.
Same item: annual demand D = 12,000 units (40 a day for 300 selling days), cost per order S = ₹500, holding cost H = ₹20 per unit per year. EOQ = sqrt(2 x 12,000 x 500 / 20) = sqrt(600,000) = about 775 units.
Orders per year = D / EOQ = 12,000 / 775 = about 15.5, so roughly one order every 3 weeks.
Safety stock rule of thumb: (maximum daily demand x maximum lead time) minus (average daily demand x average lead time). If demand can hit 60 a day and lead time 9 days, safety stock = 60 x 9 - 40 x 7 = 540 - 280 = 260.
Holding cost is not the purchase price. It is the yearly cost of holding one unit: interest on the money tied up, rent for the space, insurance, damage and obsolescence. For a ₹100 item at 20 percent, H = ₹20.
Ordering cost is the cost of placing one order regardless of size: staff time, courier or freight minimums, inspection. If freight is per carton it is not an ordering cost.
EOQ assumes steady demand and a fixed price. For seasonal items or vendor schemes (buy 100 get 10 free), use EOQ as a baseline and adjust.

Who uses the reorder quantity calculator

Kirana and FMCG retailers

A grocery store in Lucknow runs the numbers on its top 30 lines. Atta and oil get a weekly cycle with a high reorder point; slow lines like imported sauces get a small EOQ so cash is not locked in stock that moves once a month.

Auto parts and hardware dealers

A spare parts dealer in Coimbatore with hundreds of SKUs uses the calculator for the fast-moving 20 percent that produce most sales, setting reorder points as low-stock levels so the counter staff get an automatic flag.

D2C brands with contract manufacturers

A candle brand with a 25-day production lead time calculates ROP per SKU so the purchase order to the manufacturer goes out well before an Instagram campaign empties the shelf.

Restaurants and cafes

A cafe chain in Bengaluru applies EOQ to packaging and coffee beans, where the roaster charges a flat freight per order. The result is fewer, larger orders and lower freight per cup.

Reorder Quantity Calculator: frequently asked questions

What is the difference between reorder point and reorder quantity?: The reorder point is a stock level: when the quantity on hand drops to it, you place an order. The reorder quantity (often the EOQ) is how much you order at that moment. One answers when, the other how much. A reorder point of 380 and an EOQ of 775 means order 775 units each time stock falls to 380.
What is the formula for economic order quantity?: EOQ = square root of (2DS / H), where D is annual demand in units, S is the cost of placing one order and H is the cost of holding one unit for a year. With D = 12,000, S = ₹500 and H = ₹20, EOQ = sqrt(12,000,000 / 20) = sqrt(600,000), about 775 units. It balances ordering cost against holding cost.
How do I estimate holding cost per unit?: Add up what it costs to keep one unit for a year: interest on the money tied up (your CC or OD rate is a fair proxy), a share of rent and electricity for the space, insurance, and expected loss from damage or expiry. Most small businesses land between 15 and 25 percent of the item's cost price. A ₹200 item at 20 percent has H = ₹40.
What lead time should I use if the vendor is unreliable?: Use the typical lead time in the ROP formula and put the unreliability into safety stock, not into lead time. If deliveries usually take 7 days but sometimes 10, calculate ROP with 7 days and set safety stock to cover the extra 3 days of demand. That way you are not permanently overstocked to guard against an occasional delay.
Does EOQ work for seasonal or festival demand?: Not directly, because EOQ assumes demand is roughly steady through the year. For Diwali, wedding season or summer products, calculate a separate EOQ using the season's demand rate and lead time, raise the reorder point before the season and bring both down afterwards. For one-off promotions, plan the quantity from the campaign forecast instead.
Should I ignore EOQ when the vendor offers a bulk discount?: Compare total cost at the EOQ against total cost at the discount quantity: purchase cost plus ordering cost plus holding cost for a year. A 3 percent discount on a ₹1 lakh annual purchase saves ₹3,000; if the larger lot raises holding cost by more than that, the discount is not worth it. Expiry-prone goods rarely justify the bigger lot.