# Business Central Reorder Point and Safety Stock Calculator

> Source: https://netray.co/tools/business-central-reorder-point-safety-stock-calculator
> Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems.
> Section: Free Tools

## Short answer

Get values for Reorder Point, Safety Stock Quantity, Reorder Quantity and Maximum Inventory to enter on the item card or stockkeeping unit.

## Category

supply-chain

## Erp

Dynamics 365 Business Central

## Audience

- Planner
- Buyer
- Inventory manager
- BC consultant

## Tool

**Kind:** calculator

**Currency:** $

**Inputs:**

#### Average daily demand

**Key:** daily

**Type:** number

**Default:** 40

**Min:** 0

**Step:** 1

**Unit:** units/day

#### Standard deviation of daily demand

**Key:** sigma

**Type:** number

**Default:** 12

**Min:** 0

**Step:** 1

**Unit:** units/day

#### Replenishment lead time

**Key:** lead_time

**Type:** slider

**Default:** 14

**Min:** 1

**Max:** 90

**Step:** 1

**Unit:** days

#### Target service level

**Key:** service

**Type:** select

**Default:** 0.95

**Options:**

##### 90%

**Value:** 0.9

##### 95%

**Value:** 0.95

##### 97.5%

**Value:** 0.975

##### 99%

**Value:** 0.99

#### Cost per purchase order

**Key:** order_cost

**Type:** number

**Default:** 75

**Min:** 0

**Step:** 5

**Unit:** $

#### Unit cost

**Key:** unit_cost

**Type:** number

**Default:** 20

**Min:** 0

**Step:** 1

**Unit:** $

#### Annual holding cost

**Key:** holding

**Type:** number

**Default:** 22

**Min:** 0

**Max:** 100

**Step:** 1

**Unit:** % of unit cost

#### Demand days per year

**Key:** days_year

**Type:** number

**Default:** 365

**Min:** 1

**Max:** 365

**Step:** 1

**Unit:** days

**Outputs:**

#### Service factor (z)

**Key:** z

**Expr:** normsinv(service)

**Format:** decimal

#### Demand during lead time

**Key:** ltd

**Expr:** daily * lead_time

**Format:** integer

#### Safety stock (Safety Stock Quantity)

**Key:** safety

**Expr:** z * sigma * sqrt(lead_time)

**Format:** integer

**Primary:** true

#### Reorder point

**Key:** rop

**Expr:** ltd + safety

**Format:** integer

**Primary:** true

#### Economic order quantity (Reorder Quantity)

**Key:** eoq

**Expr:** sqrt(2 * daily * days_year * order_cost / max(holding / 100 * unit_cost, 0.0001))

**Format:** integer

#### Maximum inventory

**Key:** max_inv

**Expr:** rop + eoq

**Format:** integer

**Description:** Use with the Maximum Qty. reordering policy.

**Chart:**

#### Safety stock and reorder point vs lead time

**Type:** line

**X:** lead_time

**From:** 1

**To:** 60

**Steps:** 30

**Series:**

- safety
- rop

**Disclaimer:** Assumes normally distributed daily demand and constant lead time. Business Central also applies Lead Time Calculation, Safety Lead Time and Lot Accumulation Period in its planning run.

## Content

**Intro:** Business Central's reordering policies need numbers on every item or stockkeeping unit: Reorder Point, Safety Stock Quantity, Reorder Quantity and Maximum Inventory. This calculator derives them from demand history, lead time and a service level instead of guesses.

**Sections:**

#### How to use it

**Body:** Pull average daily demand and its standard deviation from item ledger entries, using at least six months of data. Enter your supplier lead time in days, choose the service level, and add ordering and holding cost to get an economic order quantity. Copy the outputs into the item card: reorder point and safety stock, reorder quantity or maximum inventory depending on your policy.

#### The formulas

**Body:** Safety stock is z times the daily demand standard deviation times the square root of lead time. Reorder point is demand during lead time plus safety stock. Economic order quantity is the square root of two times annual demand times order cost, divided by annual holding cost per unit. Maximum inventory is the reorder point plus the order quantity, a common setting for the Maximum Qty. policy.

**Bullets:**

- Fixed Reorder Qty.: uses Reorder Point and Reorder Quantity
- Maximum Qty.: uses Reorder Point and Maximum Inventory
- Order: plans to demand and ignores reorder point
- Lot-for-Lot: plans to demand with optional safety stock

#### Reading the chart

**Body:** Safety stock grows with the square root of lead time, while demand during lead time grows linearly, so long lead times dominate the reorder point. A cheaper way to cut inventory is often a shorter lead time, not a lower service level. Rerun with a different supplier lead time to see the saving.

#### Common mistakes

**Body:** Using average monthly demand without its variability, forgetting that safety stock covers lead time variation as well, and leaving Reorder Point on items set to Lot-for-Lot. Also remember Include Inventory and the planning worksheet: if purchase orders already cover the demand, the planning run will not propose a new one.

**Cta:** If you want these parameters calculated for thousands of items from live BC history and written back after approval, that is a job a read-only data extract and a small script can do for you.

**Faq:**

#### Which BC fields do I fill in?

**Answer:** On the item card or stockkeeping unit under Planning: Reordering Policy, Reorder Point, Reorder Quantity or Maximum Inventory, and Safety Stock Quantity. Safety Lead Time is a separate time buffer.

#### Why use a normal distribution?

**Answer:** It is the standard simplification for fast-moving items. For intermittent demand or very low volume, use a lot-for-lot policy with a small safety stock, or use a different distribution.

#### How many days of history should I use?

**Answer:** At least 6 to 12 months of daily or weekly demand, removing one-off events such as a bulk order. Too little data underestimates variability.

#### Does the planning run honour these values?

**Answer:** Yes. The planning worksheet and requisition worksheet use them to propose orders. Check calendars, lead time calculations and any existing supply that changes the result.

## Search terms

business central reorder point, business central safety stock calculation, business central reordering policy fixed reorder qty, business central maximum inventory, business central eoq, dynamics 365 business central planning parameters, reorder point calculator

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