Reorder points for a parts room: how to set them, with a worked example

A parts room runs out of things for two reasons: nobody noticed it was low, or somebody noticed and ordered too late. Reorder points fix both. Each stocked part gets a number; when the shelf drops to that number, it goes on the next order. This guide covers how to set the number, how much cushion to keep, and how to stop the parts room from turning into a pile of stuff nobody uses.

The reorder point formula

The standard formula is:

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

• Average daily usage is how many you use on a normal day.
• Lead time is how long it takes from placing the order to having the part on the shelf, not just the supplier’s ship time. Include the day it takes you to actually place the order and the day it sits in receiving.
• Safety stock is the cushion for a busy week or a late delivery.

The first part of the formula covers the parts you’ll use while you’re waiting for the order to arrive. The safety stock covers the days when things go worse than average.

One rule when you check against it: compare the reorder point with on hand plus on order, not on hand alone. Otherwise you’ll re-order the same part every day until the first order shows up.

Getting usage from your own history

Don’t guess usage. Pull it from what you actually sold and used:

1. Pick a window. The last 90 days is a reasonable start. Use a longer window for slow movers and a shorter one if your work changed recently.
2. Count everything that left the shelf: parts on invoices, parts consumed by fab or build work, and counter sales. Don’t count returns.
3. Divide by working days in the window, not calendar days, if the shop is closed weekends.
4. Look for spikes. One fleet job that used 40 filters in a week isn’t normal usage. Either leave it out or plan for it separately.

If your parts and your invoices live in different systems, this step is painful, which is exactly why parts rooms end up running on gut feel.

Safety stock in plain terms

There are statistical ways to calculate safety stock. For most shop parts rooms, a simpler method works well enough:

Safety stock = (maximum daily usage × maximum lead time) − (average daily usage × average lead time)

In words: how many would you need in the worst realistic case (your busiest day rate and your slowest supplier delivery), minus what you’d need on an average day. The difference is your cushion.

Adjust it with judgment:

• Same-day or next-day parts from a local supplier need little safety stock, or none.
• Parts that stop a job when they’re missing (common filters, fluids, fasteners, consumables for the fab floor) deserve more.
• Expensive parts cost real money sitting on the shelf. Keep the cushion small and accept the occasional special order.

A worked example

The numbers below are made up for illustration. Use your own history.

A shop stocks a common oil filter. Over the last 60 working days it used 120.

• Average daily usage = 120 ÷ 60 = 2 per day
• On its busiest days it used up to 4 per day
• The supplier usually delivers in 3 days from order to shelf, and the slowest delivery was 5 days

Safety stock = (4 × 5) − (2 × 3) = 20 − 6 = 14

Reorder point = (2 × 3) + 14 = 6 + 14 = 20

When on hand plus on order drops to 20, the filter goes on the next purchase order.

How many to order? A simple approach is to order enough to cover a set period plus the safety stock. If you order this supplier weekly (5 working days), a sensible max is:

Max = reorder point + (average daily usage × days between orders) = 20 + (2 × 5) = 30

So when the shelf reaches 20, you order back up to 30, about 10 filters, adjusted for case quantities or a price break.

Min/max vs reorder point

You’ll hear both terms. They’re closely related:

• Reorder point answers when to order.
• Min/max answers when and how many: the min is effectively the reorder point, and the max is the level you order back up to.

In practice, set a reorder point for every stocked part and a max (or a standard order quantity) for the ones you order often. Round both to the case or pack size you actually buy in.

What to stock and what to special-order

Not every part belongs on the shelf. A quick way to sort them:

Stock it	Special-order it
Used every week	Used a few times a year
Cheap enough that a cushion doesn’t hurt	Expensive or easily damaged
Stops a job when missing	Available same-day from a local supplier
Long or unreliable lead time	Vehicle-specific or one-off

Review the list regularly. A part that moved from “stock” to “rarely used” is cash sitting on a shelf. A part you special-order every week should probably be stocked.

Bins and locations

Reorder points only work if the count is right, and the count is only right if parts live where the system says they live.

• Give every stocked part one home location (shelf, bin, rack). Overflow can have a second location, but record it.
• Label the bin, not just the box. Boxes get used up; bins stay.
• Scan or label parts in and out so pulls and receipts are recorded when they happen, not at the end of the day from memory.
• Keep fast movers near the bays or the counter, and slow movers further back.

Cycle counts beat the yearly count

A once-a-year count finds problems eleven months too late. Cycle counting spreads the work out:

• Count a few bins every week, so every location gets counted several times a year.
• Count fast movers and expensive parts more often than slow, cheap ones.
• Count when a bin hits zero or the reorder point; it’s the easiest moment to count.
• When a count is off, find out why: a pull that wasn’t recorded, a part received to the wrong location, a return that didn’t go back on the shelf.

Job demand vs stock replenishment

There are two separate reasons to order a part, and they should show up on the same list:

1. Replenishment. A stocked part dropped to its reorder point.
2. Job demand. An open job needs a part you don’t have (or don’t stock), and the job is waiting on it.

If replenishment lives in one place and job demand lives in the service writer’s head, someone orders the stock and forgets the job, or orders the job part twice. Put both on one “what do we need?” list, grouped by supplier, so each purchase order covers both and the job knows when its part has arrived.

Consignment and drop ship

Two ways to keep parts available without owning them on your shelf:

• Consignment. Some suppliers will stock parts in your shop that you only pay for when you use them. Track consignment stock separately so it isn’t counted in your inventory value, and record usage promptly so the supplier bills correctly.
• Drop ship. For parts that go straight to a customer, often online orders, have the supplier ship them directly. Nothing touches your shelf, but the order still needs a purchase order and tracking so you know it went out.

Doing this in ShopJig

ShopJig’s parts and inventory module keeps a costed stock ledger with stock by location, counts and reorder points, and a single “What do we need?” list that shows what’s low and what open jobs are waiting on. Purchase orders and receiving, supplier price lists and drop ship are built in, and scanning and labels handle bin labels and scanning parts in and out. Because the ledger is costed, inventory and cost of goods flow to QuickBooks Online in the daily summary entries. See how it fits a repair shop.