The basic formula for calculating reorder points is: Reorder Point = (Average Daily Usage Rate × Lead Time) + Safety Stock Average Daily Usage Rate: This is the average amount of inventory used or sold per day. It can be determined by analyzing historical sales data. Lead Time: This is the time it takes for a new order to be delivered from the supplier once it is placed. It includes order processing time and shipping time. Safety Stock: This is an additional quantity of stock kept on hand to mitigate the risk of variability in demand or supply chain disruptions.