Logistics & Supply Chain

Basic

Reorder Point

Stock level that triggers a new order, covering demand during the lead time.

Formula

ROP = d L

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Variables

ROPReorder point

dDemand per day

LLead time (days)

Example

d=50/day, L=7: ROP = 350 units

Did You Know?

Set the reorder point too low and you stock out; too high and cash sits frozen on the shelf.

logistics reorder inventory

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More in Logistics & Supply Chain

Economic Order Quantity

Order size that minimises the combined cost of ordering and holding stock.

Safety Stock

Buffer inventory that absorbs demand variability during lead time.

Inventory Turnover

How many times inventory is sold and replaced in a period.

Days Inventory Outstanding

Average number of days stock sits before being sold.

Little's Law

Average items in a system equals arrival rate times average time in the system.

Cycle Stock

Average working inventory between deliveries, half the order quantity.