1. What is Reorder Point?

The reorder point (ROP) is the inventory level at which an order should be placed to replenish stock before it runs out. It considers both the expected demand during lead time and safety stock to prevent stockouts.

2. How Does the Calculator Work?

The calculator uses the reorder point formula:

Where:

• \( Lead\ Time\ Demand \) — Expected demand during the lead time period
• \( Safety\ Stock \) — Extra inventory kept as buffer against variability

Explanation: The formula ensures you order new inventory when you have just enough stock to cover demand during the lead time plus a safety buffer.

3. Importance of Reorder Point Calculation

Details: Calculating ROP helps maintain optimal inventory levels, prevents stockouts, minimizes holding costs, and improves supply chain efficiency.

4. Using the Calculator

Tips: Enter lead time demand (average daily demand × lead time in days) and desired safety stock level. Both values must be non-negative numbers.

5. Frequently Asked Questions (FAQ)

Q1: How is lead time demand calculated?
A: Multiply average daily demand by the supplier's lead time in days. For example: 10 units/day × 5 days = 50 units.

Q2: What factors affect safety stock?
A: Demand variability, lead time variability, desired service level, and item importance.

Q3: Should ROP be adjusted seasonally?
A: Yes, if demand patterns change significantly during different seasons or periods.

Q4: How often should ROP be recalculated?
A: Whenever demand patterns or lead times change significantly, or at least quarterly.

Q5: What's the difference between ROP and EOQ?
A: ROP tells you when to order, while EOQ (Economic Order Quantity) tells you how much to order.