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Purchasing
Reorder point
The reorder point is the inventory level at which a replenishment order should be triggered.
Also known as
Order point
Direct answer
What is Reorder point?
The reorder point is the inventory level at which a replenishment order should be triggered. It ensures stock arrives before a stockout. A dynamic reorder point reacts to forecast demand, lead time, and variability.
Formula
Reorder point = demand during lead time + safety stock
Practical example
At 50 units daily demand, 20 days lead time, and 200 units safety stock, the reorder point is 1,200 units.
What teams should remember
The reorder point is the inventory level at which a replenishment order should be triggered.
It ensures stock arrives before a stockout. A dynamic reorder point reacts to forecast demand, lead time, and variability.