§1Reorder point
Reorder point = daily usage × lead time (days) + safety stock
Use your own daily usage, and the lead time the supplier has met, not the one it quoted. If usage swings by day of week, use the busiest days.
§2Sizing safety stock
A simple rule: hold enough to cover the longest delay you've seen in the last year, plus your peak-week increase. A statistical rule uses the variability of demand and lead time; it needs more data but holds less stock.
Space is the real limit. Pallets stored outside get wet, and wet pallets get mould. If you can't store enough, ask the supplier to hold stock for you and write the quantity into the contract.
§3Put lead time in the contract
State the order-to-delivery time, the hours orders must be placed, and the remedy when the supplier misses (expedite at its cost, or your right to buy elsewhere and charge the difference). See the lead-time clause.
§4A simple way to size safety stock
A common starting point is to hold enough pallets to cover your usage during the longest delivery delay you're willing to plan for.
Safety stock = daily pallet usage × (worst-case lead time − normal lead time)
If you use 400 pallets a day, normal lead time is 2 days and you plan for a worst case of 5, the buffer is 400 × 3 = 1,200 pallets. The figures are an illustration; use your own usage and your supplier's lead-time history.
Check that you have the floor or yard space for that buffer, and that stored wood pallets are kept dry. Wet pallets can grow mould and may be refused by food and pharmaceutical receivers.
§5Review it
Revisit the buffer when volume changes, when you add a second supplier, or when lead times shift. A second supplier often lets you hold less safety stock, because both rarely fail at once.