Reorder point
The stock level at which you place a fresh order, set so that the new stock arrives before the shelf runs empty.
A reorder point turns "we are running low" into a number. When stock on hand drops to that number, it is time to order.
The two things that set it
How fast the item sells and how long the supplier takes. Multiply your average daily sale by the supplier's lead time in days, and you have the stock you will consume while you wait.
Add a buffer
Demand spikes and deliveries slip. Add safety stock on top — enough to cover the bad week, not so much that cash sits on the shelf. Fast-moving items with unreliable suppliers need a bigger buffer than steady ones.
Review it, do not set it once
Season, price changes and a new competitor all move the number. Revisit reorder points for your top-selling items every few months, and any time a supplier's delivery time changes.
What it should trigger
A reorder point is only useful if it raises an alert you actually see — a low-stock list you work through, ideally one that already knows which supplier to buy from.