What a fixed order point system actually does
A fixed order point system (also called a continuous review system or Q-system) monitors inventory levels constantly and triggers a purchase order for a fixed quantity whenever stock drops to or below a calculated reorder point. The timing of orders varies based on demand, but the order size stays the same each cycle.
This is the opposite of a periodic review system, where you check inventory on a schedule and order variable quantities. In a fixed order point system, you always order the same amount (typically your EOQ), but the interval between orders fluctuates with sales velocity.
For FBA sellers, the fixed order point system works best when you can monitor inventory positions daily or use software that tracks stock levels automatically. The approach requires less safety stock than periodic review because you only need to buffer against variability during the lead time, not the lead time plus a review interval.
The fixed order point system formula
That shorter protection period means you carry fewer buffer units for the same service level than a periodic review system would require. To set the trigger itself, use our free reorder point calculator.
Example: fixed order point for an FBA product
You sell a yoga mat with 20 units/day average demand, daily standard deviation of 5 units, supplier lead time of 45 days, ocean freight 22 days, FBA receiving 17 days (total L = 84 days), 95% service level (z = 1.65), and an EOQ of 600 units.
- Safety stock: 1.65 x 5 x √84 = 1.65 x 5 x 9.17 = 76 units
- Reorder point: (20 x 84) + 76 = 1,680 + 76 = 1,756 units
When your FBA inventory position (on-hand plus in-transit) hits 1,756 units, you place an order for 600 units. At 20 units/day, you will hit the reorder point roughly every 30 days, but faster during peak weeks and slower during lulls.
Compare this to the periodic review system for the same SKU: safety stock would be 1.65 x 5 x √(7+84) = 79 units. The fixed order point system saves 3 units of safety stock here. The savings grow with longer review intervals.
How FBA constraints reshape the system
Supplier MOQs override EOQ. If your EOQ says 600 units but the supplier’s minimum is 1,000, your order quantity jumps. The reorder point stays the same, but the larger order means more days of supply per cycle and higher carrying costs.
Restock limits cap what you can send. Amazon may only accept 800 of your 1,000-unit order into FBA. The remainder sits at a 3PL or in your supplier’s warehouse, which changes your effective inventory position and can cause the fixed order point system to trigger a premature reorder.
Lead time variability is high. FBA receiving delays range from 5 days to 30+ days depending on season. A static lead time in your ROP formula will underperform. Recalculate L monthly using a rolling 90-day average of actual receiving times.
Common mistakes
- Setting the reorder point once and forgetting it. Demand and lead times shift seasonally. A reorder point calculated in February will be dangerously low by September if your product has any Q4 sales lift. Recalculate quarterly at minimum.
- Not including in-transit inventory in the position check. Your inventory position in a fixed order point system is on-hand plus on-order minus backorders. Sellers who only watch FBA on-hand units trigger duplicate orders and end up overstocked.
- Using the system for too many SKUs without automation. Manually tracking reorder points across 200+ ASINs daily is unsustainable. If you cannot monitor stock levels at least every 48 hours, switch to a periodic review system for tail SKUs.