Inventory Calculator
Work out when to reorder, how much to order, and how efficiently your stock is moving — three separate questions, three separate tabs.
Advanced: use peak usage instead of a flat buffer (optional)
When your stock on hand drops to the Reorder Point, place a new order — it's sized to arrive right as your safety stock alone would otherwise run out.
EOQ finds the order size where ordering cost and holding cost roughly balance out. The total-cost curve is fairly flat near this point, so rounding EOQ to a convenient case or pallet size rarely costs much.
Higher turnover generally means cash isn't sitting idle on the shelf — but "too high" can also mean you're understocked and risking stockouts, so compare against your own industry norms rather than chasing the highest possible number.
Too Little Stock and Too Much Stock Are Both Expensive — Just in Opposite Ways
Run out of a product and you lose the sale today, and possibly the customer's next order too. Sit on too much of it and the cost is quieter but just as real — cash locked in a shelf instead of your bank account, plus storage space, insurance, and the risk the stock goes stale or out of fashion before it sells. Inventory management is really just the ongoing job of staying in the narrow band between those two expensive mistakes, and three numbers do almost all of the work: when to reorder, how much to order, and how efficiently your stock is actually moving.
Reorder Point — Knowing When, Not How Much
The reorder point is the stock level that should trigger your next purchase order, timed so the new stock arrives before you run out. It has two parts: the demand you'll get through during the supplier's lead time, plus a safety stock buffer for the days demand runs higher than average or the delivery runs later than expected.
Reorder Point = (Average Daily Usage × Lead Time) + Safety Stock
Say a hardware store sells an average of 12 units of a particular faucet a day, and the supplier takes 9 days to deliver a fresh order. Lead-time demand is 12 × 9 = 108 units. Add a 4-day safety buffer (12 × 4 = 48 units) to cover a busier week or a slightly late delivery, and the reorder point comes to 156 units — meaning as soon as stock on hand hits 156, it's time to order again, not when the shelf actually looks empty.
Economic Order Quantity (EOQ) — Knowing How Much
Reorder point tells you when; EOQ tells you how much to order each time. Order too little too often and you pay ordering costs (paperwork, receiving labour, delivery fees) constantly. Order too much too rarely and you pay holding costs (capital tied up, storage, insurance, shrinkage) on inventory that just sits there. EOQ finds the order size where those two costs are roughly balanced:
EOQ = √(2 × Annual Demand × Order Cost ÷ Holding Cost per Unit)
Using the same faucet business — annual demand of 4,380 units (12/day × 365 days), an order cost of ₹1,500 per purchase order, and a holding cost of ₹40 per unit per year — EOQ works out to √(2 × 4,380 × 1,500 ÷ 40) = √328,500 ≈ 573 units per order. That means roughly 4,380 ÷ 573 ≈ 7.6 orders a year, or one order roughly every 48 days. One useful property of EOQ worth knowing: the total-cost curve is quite flat near the minimum, so ordering 500 or 650 units instead of the "exact" 573 barely moves total annual cost — meaning it's fine to round to a convenient case or pallet size rather than chasing the decimal.
Inventory Turnover Ratio — Knowing How Efficiently Stock Is Moving
Reorder point and EOQ are about a single product line. Turnover ratio steps back and asks how efficiently your inventory as a whole is being converted into sales over a period, usually a year:
Inventory Turnover = Annual COGS ÷ Average Inventory Value
If a business has ₹18,00,000 in annual cost of goods sold and carries an average inventory value of ₹3,00,000, turnover is 18,00,000 ÷ 3,00,000 = 6.0 times a year. Flip that into days with 365 ÷ turnover, and you get roughly 61 days — meaning, on average, a unit of stock sits for about two months before it's sold. Whether 6x is "good" depends entirely on the industry: a grocery chain might turn inventory over 15–20 times a year, while a furniture retailer might healthily sit at 3–5 times, because the products themselves move at very different speeds.
How to Use This Calculator
- Reorder Point tab: enter average daily usage and supplier lead time for the simple buffer method, or expand "Advanced" to use your busiest day and slowest delivery for a more defensive, worst-case safety stock figure.
- Order Quantity (EOQ) tab: enter annual demand, the cost to place one order, and the annual cost to hold one unit, to see the order size that minimises your combined ordering and holding costs.
- Turnover Ratio tab: enter annual COGS and your average inventory value to see how many times a year your stock turns over, and how many days of cover that represents.
Frequently Asked Questions
Reorder point is a trigger — a stock level that tells you it's time to place an order. EOQ is a quantity — how many units that order should be for. A common setup uses both together: reorder as soon as stock hits the reorder point, and order the EOQ amount each time.
Using maximum daily usage and maximum lead time (rather than averages) builds in protection against the actual scenario that causes stockouts — an unusually busy stretch combined with a slower-than-usual delivery. It typically produces a larger, more conservative safety stock figure than the simple day-buffer method.
Generally it signals efficient use of cash, but an unusually high ratio compared to your industry can also mean you're running too lean and risking stockouts during any demand spike. The useful comparison is against your own history and similar businesses, not the highest number possible.
No need to be precise. The total-cost curve around the EOQ is quite flat, so rounding to a supplier's minimum order quantity, case size, or pallet size typically adds only a small amount to total annual cost.
No — everything is calculated directly in your browser and nothing is saved, uploaded, or transmitted anywhere.
Conclusion
Reorder point, EOQ, and turnover ratio answer three different questions — when to order, how much to order, and how well your stock is moving overall — and together they replace a lot of gut-feel stock decisions with a repeatable, numbers-based routine.