Reorder Point
A reorder point is a rule that signals or initiates replenishment when stock falls below a chosen threshold. The threshold depends on demand, lead time and how much uncertainty the business accepts.
A worked example
A practical example to make the concept clear.
| Step | Illustrative record and result |
|---|---|
| Starting record | Average demand is 5 units per day and supplier lead time is 4 days: expected lead-time demand is 20 units. |
| Change or calculation | Assume a 10-unit safety buffer. Illustrative reorder point: 20 + 10 = 30 units. |
| Meaning and exception | Review replenishment when the chosen planning quantity reaches 30. Define how incoming supply and reserved demand enter that quantity. |
Why it matters
Use sales demand, supplier lead times and a suitable stock buffer to choose the threshold. Review it when demand or delivery times change, and make purchasing responsibility clear.
Make it practical
When does the system suggest replenishment, and who confirms the purchase? Test the answer with the exact release and application package under consideration. Explore Datrylo applications.