Inventory planning asks when to order, how much buffer to retain and how much to buy. A single inventory number cannot answer all three questions.
Calculate a trigger
Reorder point is mean daily demand times lead-time days plus safety stock. Both quantities must use matching time periods. At 20 units per day and a seven-day lead time, expected demand before replenishment is 140 units. A 50-unit buffer gives a 190-unit trigger.
Use the uncertainty model within its assumptions
The fixed-lead-time safety-stock formula is z times daily standard deviation times the square root of lead time. It assumes independent daily demand and fixed lead time. A one-sided z near 1.645 corresponds to about 95% normal cycle service, not a guaranteed fill rate.
Choose order quantity separately
EOQ balances an entered order cost with annual holding cost under steady demand. Reorder point does not specify how much to buy. Pack sizes, minimum orders, storage and obsolescence may override a theoretical EOQ. Define inventory position consistently, including on-order stock, before using a trigger.
Worked example
Scroll the table horizontally on small screens to see every column.
| Daily demand | Lead time | Buffer | Trigger |
|---|---|---|---|
| 20 | 7 days | 50 | 190 units |
The trigger is separate from the order quantity.
Sources and checks
Examples are illustrative and can be checked with the linked tools. Read each tool’s assumptions before applying its result. How we verify methods.