When should you reorder?
In most small companies, someone reorders when the shelf looks almost empty. By then it's often late: the supplier needs time, and customers don't wait. Here's how I think about it, and a tool to try.
Reorder when the stock you have left covers what you'll sell while you wait for the delivery, plus a margin for surprises. That level is the reorder point.
The first part is simple arithmetic. The margin is where the decisions are: too small and you run out, too big and money sits on the shelf.
Try it with your numbers
90 days of one product, with demand that moves up and down like real sales.The textbook links the margin to how much demand varies and to the service level you want, the share of cycles in which you don't run out:
A small company rarely has clean data for σ on day one. I'd start simpler: a few days of cover, then measure how often you actually run out and how much stock sits still, and adjust. Ask, connect, measure.
And not every product deserves the same care. A handful usually make most of the sales: give those a bigger margin and keep the rest lean.