Concepts
Reorder Point
Reorder Point: The inventory level at which a new order should be placed to avoid stockouts.
Reorder point formula
A simple reorder point formula is average daily usage multiplied by lead time, plus safety stock.
Why reorder points matter
Reorder points turn purchasing from guesswork into a repeatable decision. They are especially useful for parts, supplies, and fast-moving products.
How to maintain reorder points
Review reorder points when usage changes, suppliers slow down, or a product becomes seasonal. Static thresholds become stale if demand changes.