The verdict in three sentences
Stock-outs on your best-sellers silently cap your revenue: in Kampala in 2026, with import lead times of 21 to 45 days, a poorly calculated reorder point causes 3 to 6 days of stock-out per month on your top products. Each stock-out day is a lost sale at 30% margin. The reorder-point formula — average daily sales x lead time + safety stock — and a 95% service level target eliminate most of the problem without tying up too much cash.
The reorder-point formula
The reorder point is the stock level that triggers a new order. The formula is simple:
Reorder point = (average daily sales x lead time) + safety stock
Take a best-seller in Kampala: 12 units sold/day, 30-day supplier lead time, 90-unit safety stock.
- Consumption during lead time: 12 x 30 = 360 units.
- Reorder point: 360 + 90 = 450 units.
As soon as stock hits 450 units, you reorder. The safety stock (90 units) absorbs demand spikes and supplier delays. Without it, the slightest variation causes a stock-out.
Choosing your service level
Safety stock depends on the target service level: the probability of NOT stocking out during lead time. The higher it is, the more inventory is tied up.
| Service level | Safety stock | Stock-out days avoided/mo | Cash tied up |
|---|---|---|---|
| 90% | 55 units | ~3.5 d -> 1.2 d | Base |
| 95% | 90 units | ~3.5 d -> 0.5 d | +30% |
| 97% | 120 units | ~3.5 d -> 0.3 d | +55% |
| 99% | 180 units | ~3.5 d -> 0.1 d | +100% |
95% is the sweet spot: it eliminates most stock-outs for a reasonable inventory cost. Targeting 99% ties up about 2x more inventory for a marginal gain — rarely justified except on very high-margin or strategic products.
The quantified impact of stock-outs
| Scenario | Stock-out days/mo | Lost sales/mo | Lost margin (30%) |
|---|---|---|---|
| No reorder point | 5 d | 60 units x 25,000 F | ~450,000 FCFA |
| Reorder point + 90% service | 1.2 d | 14 units | ~105,000 FCFA |
| Reorder point + 95% service | 0.5 d | 6 units | ~45,000 FCFA |
Moving from no method to a 95% reorder point, this merchant recovers ~405,000 FCFA of margin/month on a single best-seller. Applied to 10 key SKUs, the impact runs into millions per year.
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Mini case study
Marc imports electronics into Kampala. His best-seller sells 12 units/day at 25,000 FCFA (30% margin = 7,500 FCFA/unit), supplier lead time 30 days. Without a method, he stocks out 5 days/month, losing 60 sales = 450,000 FCFA of margin/month.
He applies the formula: reorder point = 450 units, safety stock 90 (95% service). Stock-outs drop to 0.5 day/month (6 lost sales, 45,000 FCFA). He recovers 405,000 FCFA of margin/month on this single product, at the cost of an extra 90 units of safety stock (~1.6M FCFA tied up once). Return on investment in under 5 weeks.
FAQ
What is the reorder-point formula?
Reorder point = (average daily sales x lead time) + safety stock. Example: 12 units/day x 30 days + 90 = 450 units. You reorder as soon as stock reaches this threshold.
Why is safety stock indispensable?
Because demand varies and suppliers run late. In Kampala, with 21 to 45 day lead times, safety stock absorbs these uncertainties and prevents stock-outs during replenishment.
What service level should you target?
95% is the sweet spot: it eliminates most stock-outs for a reasonable inventory cost. 99% ties up ~2x more inventory for a marginal gain.
How much does one stock-out day cost?
On a best-seller at 12 sales/day at 25,000 FCFA (30% margin), one stock-out day costs ~90,000 FCFA of lost margin. Multiply by the number of days and SKUs affected.
Do you need a tool to manage reorder points?
Above 15-20 active SKUs, yes: a dashboard that automatically calculates the reorder point per product and alerts at the threshold prevents oversights and faulty manual calculations.
Let's talk about your project. We integrate reorder-point alerts and demand forecasting into your store so you never miss a sale on your best-sellers again. WhatsApp +221 77 596 93 33.
Mohamed Bah
Fondateur, Kolonell
Passionate about digital and entrepreneurship in Africa, Mohamed has been helping Sénégalese businesses with their digital transformation since 2020. Founder of Kolonell, he believes every SME deserves a professional and accessible online présence.
