Reorder Points, Min/Max, and Par Levels: The Simple Math That Prevents Stockouts

Most stockouts are not bad luck — they are a missing number. If every bin in your warehouse had the right reorder point, you would almost never run out and almost never overstock. Here is the simple math, in plain terms.

What is a reorder point?

A reorder point is the stock level that triggers a restock. Hit it, and it is time to reorder — not later, not when someone notices the bin looks low. The whole job of a reorder point is to buy you enough cushion to replenish before you hit zero.

How to calculate a reorder point

The formula is straightforward:

Reorder point = (average daily usage × lead time in days) + safety stock

Say a bin of 1-inch gaskets sells 8 a day, your lead time to restock is 5 days, and you keep 15 units of safety stock. Your reorder point is (8 × 5) + 15 = 55 units. When the bin drops to 55, you reorder — and you should still have your safety buffer when the new stock lands.

Min/max vs. par levels: what is the difference?

These terms get used interchangeably, but they describe the same idea from two angles:

• Min is the reorder point — the floor you never want to cross.
• Max is the level you restock back up to.
• Par level is simply the target quantity a bin should hold — usually the max.

Set both a min and a max on every bin and replenishment becomes mechanical: when on-hand hits the min, order enough to reach the max. No judgment calls.

Setting par levels for critical spares

For emergency parts — the hose or seal that idles a crew when it is missing — bias your safety stock up. The carrying cost of a few extra gaskets is trivial next to a day of downtime. For fast, cheap, predictable movers, a tighter par keeps cash off the shelf.

Automating replenishment so you never count by hand

The math only helps if someone acts on it. That is where manual systems break: the number lives in a spreadsheet nobody checks. The fix is to let the bin tell you.

With TexTrack Warehouse, every bin carries its reorder point and max. Scan the NFC tag to update the count in seconds, and the moment on-hand crosses the reorder point the bin flags itself and drafts the restock. Stock replenishment stops being a task and becomes something that just happens.

Open the app to set par levels on your first bins.