Explained
Roughly, average daily usage times supplier lead time, plus a safety stock. A well-set point reduces both stock-outs and overstock.
Example
Usage of 5 a day, a 7-day lead time and 15 safety stock: reorder at 50.
The reorder point is the stock level at which a new order must be placed before the item runs out.
Roughly, average daily usage times supplier lead time, plus a safety stock. A well-set point reduces both stock-outs and overstock.
Usage of 5 a day, a 7-day lead time and 15 safety stock: reorder at 50.