Our Reorder Point Calculator is an essential tool for businesses in logistics and supply chain management. It helps determine when to reorder stock to avoid running out of inventory.
Reorder Point Calculator
Results
Data Source and Methodology
All calculations are strictly based on standard logistics formulas. For accurate data, consult authoritative sources.
The Formula Explained
The formula used: \( \text{Reorder Point} = \text{Lead Time Demand} + \text{Safety Stock} \)
Glossary of Variables
- Lead Time Demand: The estimated demand during the lead time.
- Safety Stock: Extra inventory held to prevent stockouts.
- Reorder Point: The inventory level at which a new order should be placed.
How It Works: A Step-by-Step Example
For example, if your lead time demand is 150 units and your safety stock is 50 units, the reorder point would be \( 150 + 50 = 200 \) units.
Frequently Asked Questions (FAQ)
What is a reorder point?
A reorder point is the inventory level at which a new order should be placed to replenish stock before it runs out.
Why is safety stock important?
Safety stock acts as a buffer against demand variability and lead time fluctuations.
How do I calculate lead time demand?
Lead time demand is calculated by multiplying the average daily demand by the lead time in days.
Can the reorder point change?
Yes, it can change based on shifts in demand patterns or lead time variations.
How often should I review my reorder point?
It's recommended to review it regularly, especially when there are changes in demand or supply chain processes.