Calculator

Reorder Point Carrying Cost Calculator

Reorder points protect availability, but they also tie up capital and create a stock posture that keeps costing money while it sits. Use this calculator to translate a replenishment rule into inventory value and monthly carrying drag.

Calculate reorder point units from demand and lead time
Turn that stock posture into inventory value
See the monthly carrying cost attached to staying safe

Calculate reorder point carrying cost

Enter average daily unit sales, supplier lead time, safety stock, unit cost, carrying rate, and storage burden per unit. The result shows the reorder point and what that minimum stock position quietly costs to hold.

Average daily unit sales Average unit demand per day. Lead time days How long replenishment takes to arrive. Safety stock units Buffer units held above expected lead-time demand. Unit cost Landed or replenishment cost per unit. Annual carrying rate % Capital, markdown, insurance, and stock risk blended annually. Storage cost per unit per month Ongoing storage or handling burden per unit each month.

Three replenishment scenarios.

Formula

What the reorder point posture costs

Reorder point units = (Average daily unit sales × Lead time days) + Safety stock

Monthly carrying cost = Monthly capital carry on reorder value + Unit storage cost × Reorder point units

The reorder point is not just an availability rule. It is a minimum capital posture the business agrees to hold. This model keeps the stock buffer and its carrying cost in the same conversation so replenishment decisions stay tied to margin reality.

Where replenishment gets mispriced

Teams set safety stock from service levels and never price the tied-up capital.
Lead-time buffers feel operational, so they never show up in SKU economics.
Storage drag gets treated as a warehouse issue instead of a margin issue.

Useful next step

Once the reorder posture is visible, compare it with full inventory carrying cost and landed cost to decide whether faster replenishment or less stock depth buys more margin than a price change.