How to calculate how much inventory to order
Updated October 2026 · By Artem Stepanenko, founder of SCAIT
Short answer. Order enough to cover your sales until the next order can arrive, plus safety stock, minus what you already have and what is already on the way. As a formula, order quantity = average daily sales × (lead time + review period) + safety stock − (stock on hand + stock on order). Then round up to your supplier's carton or minimum order quantity.
Step 1. Get real daily sales
Take the last 8 to 12 weeks of sales per SKU and divide by the number of days the product was actually in stock. Days with zero stock show zero sales, and if you average them in, the product looks slower than it is. You then order too little, run out sooner and the next average looks even weaker.
Step 2. Measure the full lead time
Lead time is everything from the day you place the order until the stock can be sold: production, inspection, freight, customs, the trip to your warehouse and the days your 3PL or Amazon needs to receive it. Use what actually happened on your last few orders, not the supplier's quote.
Step 3. Add your review period
If you look at reorders once a week, the next chance to order is 7 days away, so the order has to cover those 7 days too.
Step 4. Add safety stock
A common formula is safety stock = Z × standard deviation of daily sales × √(lead time in days). Z sets how often you accept a stockout: 1.65 covers about 95% of cycles, 2.05 about 98%. Give your A items (the SKUs that bring most of the revenue) the higher level and your slow C items the lower one.
Step 5. Subtract what you have
Subtract stock on hand in every warehouse that serves this channel, plus open purchase orders that will arrive within the lead time. Then round up to full cartons or the supplier's minimum.
Worked example
- Average daily sales on in-stock days: 40 units; standard deviation: 12 units
- Lead time: 60 days; weekly review: 7 days; target 95% (Z = 1.65)
- Safety stock = 1.65 × 12 × √60 = 1.65 × 12 × 7.75 ≈ 154 units
- Target stock = 40 × (60 + 7) + 154 = 2,834 units
- On hand 900 + on order 1,200 = 2,100 units
- Order quantity = 2,834 − 2,100 = 734 units, rounded up to cartons of 24 = 744 units (31 cartons)
The same numbers give the reorder point: 40 × 60 + 154 = 2,554 units. When stock on hand plus stock on order drops below that, it is time to order. Here it is 2,100, so the order is due now.
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SCAIT is a done-for-you inventory management and reorder planning service for brands selling their own products on Shopify and Amazon. Every Monday we tell you what to reorder, from whom, how much and by when. See Reorder Desk (from $490 a month) or compare your options.
Related: How much inventory to send to Amazon FBA · How to prevent stockouts and overstock
Questions founders ask.
What is a reorder point?
The stock level at which you place the next order. It equals average daily sales times lead time, plus safety stock. When stock on hand plus stock on order falls below it, you order.
Should I include days when the product was out of stock?
No. Days with zero stock show zero sales and make the product look slower than it is. Average only the days it was in stock.
How often should I recalculate?
Weekly for fast movers and before every purchase order for everything else. Lead times and sales change, and a quantity set once a quarter drifts.
Does this work for Amazon FBA?
Yes, with two additions: Amazon's receiving time is part of the lead time, and capacity limits can cap how much you can send. See our guide on how much inventory to send to Amazon FBA.