The formula
Lead time demand = Average daily usage x Lead time in days
Safety stock = Average daily usage x Safety days
Reorder point = Lead time demand + Safety stock
Par level = Average daily usage x (Lead time + Safety days + Days between orders)
Why the formula is built this way: when you place an order, the shelf keeps emptying at the speed of daily usage for every day the supplier takes to deliver. Lead time demand is the stock you will burn through during that wait, so ordering with less on hand means running out before the truck arrives, even if everything goes to plan. Safety stock covers everything that does not go to plan: a busier weekend, a late delivery, a shorted case. Sizing it in days of usage keeps it honest, since two buffer days mean the same protection whatever the item. The par level extends the same logic across your whole order cycle.
How to use it, with an example
- Pick one item and work in the unit you count it in: pounds, cases, gallons or each.
- Work out average daily usage from your POS or prep records over a normal one to two weeks. Use a typical week, not your best or worst.
- Enter the supplier’s real lead time, from order placed to stock shelved and usable, and the safety days you want as a buffer. One to three days suits most fresh items.
- Enter your order cycle (how often you order this item) for the par level, and today’s stock count if you want the order quantity and a clear order-or-wait answer.
Worked example: A kitchen uses 12 lb of chicken breast a day. The supplier takes 3 days to deliver, and the chef wants 2 extra days of safety cover. Lead time demand is 12 x 3 = 36 lb, safety stock is 12 x 2 = 24 lb, so the reorder point is 60 lb: when the count falls to 60 lb, the order goes in. Ordering every 4 days gives a par level of 12 x (3 + 2 + 4) = 108 lb, and with 40 lb on hand today the suggested order is 68 lb, up to par, and it is needed now because 40 lb is already below the trigger. The calculator above is prefilled with these same numbers, so you can see the trigger and the order quantity before setting your own.
Reorder points drift out of date as menus and volumes change, so the trigger has to live where the counts live. In Odoo for Restaurants, reordering rules sit on the product in the Odoo Inventory module and work from live stock levels against supplier lead times in Odoo Purchase, turning this calculation from a card on the storeroom wall into a prompt the system raises itself.
Common mistakes
- Building the trigger on last week’s order instead of daily usage. Orders include buffer, panic and guesswork; usage is what the kitchen actually consumed. Derive daily usage from POS sales mix and prep records, the method behind the par levels in restaurant inventory management tips.
- Using the supplier’s promised lead time. Quoted lead time is the best case. If the truck regularly arrives a day late, that day is part of the real lead time, and a reorder point built on the promise will run you out of stock on schedule.
- One reorder point for every item. A case of napkins and a case of fresh fish cannot share a trigger logic. Fast, perishable, high-cost items get tight points and frequent review; slow dry goods get simple, generous ones.
- Setting it once and never revisiting it. A menu change, a new bestseller or seasonal volume can double an item’s daily usage in a month. Review reorder points every four to six weeks and immediately after menu changes, or the triggers faithfully protect a restaurant that no longer exists.
- Forgetting that the count has to trigger the action. A reorder point only works if someone counts often enough to see the level cross it. If counts happen weekly, a trigger crossed on Tuesday is invisible until Monday, which is an argument for counting your A-items, the roughly 20% carrying 80% of the value, several times a week.
FAQs
What is the difference between a reorder point and a par level?
The reorder point is the trigger: the stock level at which you order. The par level is the target: the stock level you order up to, covering lead time, safety stock and the days until your next order. Count falls to the point, you order up to par. The two numbers work as a pair on every count sheet.
How much safety stock should a restaurant hold?
For most fresh items, one to three days of usage is a sensible buffer. Hold more for items with unreliable suppliers or spiky demand, and less for expensive, highly perishable items where the buffer itself becomes waste. A useful reality check: most restaurants aim to hold roughly five to seven days of total food inventory on hand, so safety stock that pushes one item far beyond that deserves a hard look.
Should every item have a reorder point?
Every item you cannot afford to run out of should. In practice that means your high-usage and high-cost items get precise, usage-based triggers, while low-value staples can run on simple visual minimums.
How do I get average daily usage without guessing?
Take total usage of the item over the last 14 to 28 days from your POS depletion or prep records and divide by the days. Busy and quiet days average out over that window.
Can a reorder point be too high?
Yes. Set from fear rather than usage, it quietly converts cash into shelf stock, fills storage, and pushes perishables past their dates. If your storeroom is full and waste is rising while stockouts never happen, the points are too high or the pars are stale, and recalculating from current usage usually frees up both space and cash.
