Running out of a medicine your customer urgently needs is one of the worst things that can happen in a pharmacy. The customer leaves disappointed — and often, they don't come back. On the other hand, ordering too much of a slow-moving medicine ties up your working capital and risks expiry losses.
The solution is to set accurate reorder levels for every medicine in your store. This guide explains exactly how to calculate the right reorder level for any medicine in an Indian pharmacy, and how to set up alerts so you never stock out of critical medicines.
What Is a Reorder Level?
A reorder level (also called reorder point or ROP) is the minimum quantity of a medicine at which you should place a new order with your supplier. If your stock falls to or below this level, it is time to reorder — not wait until you run out completely.
The basic formula is:
Where: Lead time = number of days from placing order to receiving stock. Safety stock = buffer stock to handle demand spikes or supply delays.
Example: You sell an average of 8 strips of Metformin 500mg per day. Your distributor delivers within 2 days. Your safety stock is 1 day of sales.
Reorder Level = (8 × 2) + 8 = 24 strips. When your stock hits 24, order more immediately.
Step 1 — Calculate Average Daily Sales
The most accurate way is to look at your actual sales data over the last 30–90 days and divide by the number of days.
- Pull your sales report for the last 90 days for the medicine.
- Divide total quantity sold by 90.
- For seasonal medicines, use sales data from the same season last year.
If you are new to a medicine and have no sales history, start with a conservative estimate based on how many prescriptions you see for it per week. You can refine the reorder level after 2–3 months of actual data.
Step 2 — Know Your Lead Time for Each Supplier
Lead time is the gap between when you place an order and when the stock actually arrives. In India, this varies widely:
| Supplier Type | Typical Lead Time |
|---|---|
| Local distributor (same city) | Same day to 1 day |
| Regional distributor (same state) | 1–2 days |
| C&F agent (out of state) | 3–5 days |
| Direct from manufacturer | 7–14 days |
| Imported medicines | 2–4 weeks |
Use the worst-case lead time, not the best case. If your distributor usually delivers in 1 day but sometimes takes 3 days, use 3 days for your calculation. It is better to reorder slightly early than to run out.
Step 3 — Add Safety Stock
Safety stock is extra buffer you keep on hand to protect against demand spikes and supply delays. How much safety stock you need depends on how critical the medicine is and how variable the demand is.
- Chronic disease medicines (diabetes, hypertension, thyroid): Keep 7–14 days of safety stock. These patients come regularly, and a stockout means they cannot manage their condition. You will lose them permanently.
- Common acute medicines (paracetamol, antibiotics): 3–5 days of safety stock is usually sufficient.
- Slow-moving speciality medicines: 1–2 months of safety stock, but keep quantities small — the risk here is expiry, not stockout.
- Critical life-saving medicines (insulin, anti-epileptics, cardiac medicines): Never let these go below 2 weeks of stock. Consider keeping a small emergency reserve.
Step 4 — Calculate Reorder Quantity
Once you decide to reorder, how much should you order? The economic order quantity (EOQ) formula is technically optimal, but for Indian pharmacies, a simpler rule works well:
Reorder Quantity = (Average Monthly Sales × 1.5) − Current Stock
This orders enough to cover 1.5 months, accounting for your current stock. It balances the risk of over-ordering (expiry, cash tied up) against the convenience of fewer order cycles.
Categorise Your Medicines for Smarter Reorder Management
Not all medicines need the same attention. Use ABC analysis to prioritise:
- A-category (top 20% of SKUs, ~70% of revenue): Set precise reorder levels, review monthly, track daily. Any stockout here directly hits your revenue.
- B-category (next 30% of SKUs, ~20% of revenue): Set reorder levels, review quarterly. Alert-based monitoring is sufficient.
- C-category (bottom 50% of SKUs, ~10% of revenue): Set a minimum stock level, review every 6 months. Over-ordering is a bigger risk than stockout for C-category.
How Often to Review Reorder Levels
Reorder levels are not set-and-forget. Prescription trends change with seasons, doctor referral patterns, and new medicines. Review your reorder levels:
- Monthly: For your top 20 medicines by sales volume
- Quarterly: For all A and B category medicines
- Annually: Full review of all SKUs, including C-category
- Immediately: If a nearby doctor starts or stops prescribing a medicine heavily
How PharmaStok AI Automates Reorder Management
Manually calculating and tracking reorder levels for 500+ medicines is not practical. PharmaStok AI handles this automatically. When your stock falls below the reorder level you have set, you get a WhatsApp alert at 10 AM every morning listing all low-stock medicines. The Reorder Centre shows you which medicines need ordering, which supplier to contact, and lets you send a WhatsApp message to your distributor with a single tap.
The system also calculates velocity-based suggestions for reorder quantities, based on your actual sales history, so you are not guessing.
Frequently Asked Questions
What is the difference between reorder level and minimum stock level?
The reorder level is the trigger point at which you place a new order. The minimum stock level (also called safety stock) is the lowest acceptable quantity — the buffer you maintain at all times. Your reorder level will always be higher than your minimum stock level, because you need enough stock to last through the lead time while staying above the minimum.
How do I set reorder levels for medicines I have just started stocking?
Start conservatively — order small quantities and observe the actual sales rate for 30–60 days. Then set the reorder level based on that actual data. Beginning with a large order of a new medicine is risky because you do not know the local demand pattern yet.
Should I set reorder levels for every single medicine?
Practically, focus on your top 100–200 medicines first. These represent the majority of your revenue risk. For very slow-moving speciality medicines, a simple rule like "always keep 1 box in stock" may be sufficient rather than a formula-based reorder level.