Periodic Review Order-Up-To Level Calculator
A periodic review policy orders on a fixed schedule, such as every Monday, and raises the inventory position to a target level S. This calculator sizes S and the safety stock needed to hit your service level, then tells you how much to order today.
Your numbers
Mean demand per day over a recent stable period.
Standard deviation of daily demand, not of weekly demand.
Days between orders, for example 7 for weekly buying.
Your results
Assumes normally distributed, independent daily demand and a fixed lead time. Check the result against your ERP planning parameters before changing them.
Order-up-to level and safety stock vs review period
Sweeps Review period from 1 to 60, holding your other inputs fixed.
Automate order-up-to levels from ERP data
Optional: we can review your item history and suggest planning parameters per item class.
Optional. The tool and every export work without this. No spam.
How to use it
Enter average daily demand and its standard deviation from recent history, the days between reviews, the supplier lead time and your service target. Add what is on hand and on order. The order quantity output is S minus the inventory position, floored at zero. Run it per item or per supplier group that shares a review day.
- Use daily demand figures, not monthly, so the square root rule works
- Include open purchase orders in inventory position
- Subtract backorders from on hand if you carry them
The formula
The protection interval is the review period R plus lead time L, because an order placed today is not corrected until the next review. Safety stock is z times sigma times the square root of (R + L). The order-up-to level is average demand times (R + L) plus safety stock. Compared with continuous review, you carry more safety stock because you are blind between reviews.
Reading the chart
The sweep varies the review period from 1 to 60 days. Both S and safety stock rise as reviews become less frequent. That cost is the price of consolidating orders. If a longer review period lets you fill trucks or hit a supplier minimum, compare the added stock with the freight saved.
Common mistakes
Planners often use lead time alone as the protection interval, which understates safety stock for periodic policies. Others use the standard deviation of weekly demand with a daily lead time. Keep the units consistent. In an ERP, this maps to a periodic or period-batching lot-sizing rule with a coverage period, not a plain reorder point.
Frequently Asked Questions
What is an (R,S) policy?
R is the fixed review interval and S is the order-up-to level. At each review you order enough to bring the inventory position up to S. Order quantities vary from review to review, while the timing stays fixed.
Why is safety stock higher than with a reorder point?
With a reorder point you watch stock continuously and react when it crosses the trigger. With periodic review you cannot react until the next review, so safety stock must cover demand variability across the review period plus the lead time.
Should I use on hand or inventory position?
Use inventory position: on hand plus on order, minus backorders and allocations you cannot release. Using on hand alone causes duplicate orders whenever a purchase order is still in transit.
Does this work for intermittent demand?
Not well. The normal approximation breaks down when many days have zero demand. For lumpy items consider a bootstrapped or Poisson-based method, or a min-max rule reviewed by a planner.
If you want this level recalculated for every item from live ERP history instead of one item at a time, Netray can wire it into your planning data.
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