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 demand during lead time and safety stock to prevent stockouts.

2. How Does the Calculator Work?

The calculator uses the Reorder Point formula:

Where:

• \( Demand\ During\ Lead\ Time \) — Expected demand while waiting for new inventory
• \( Buffer\ Stock \) — Safety stock to account for variability in demand or lead time

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

3. Importance of Reorder Point Calculation

Details: Proper ROP calculation helps maintain optimal inventory levels, prevents stockouts, reduces carrying costs, and improves supply chain efficiency.

4. Using the Calculator

Tips: Enter your expected demand during lead time and desired buffer stock in units. Both values must be non-negative numbers.

5. Frequently Asked Questions (FAQ)

Q1: How do I determine demand during lead time?
A: Multiply average daily demand by lead time in days. For example, 10 units/day × 5 days = 50 units.

Q2: What's a good buffer stock level?
A: It depends on demand variability and service level goals. Common methods use standard deviation of demand or percentage of lead time demand.

Q3: Does ROP work for all inventory types?
A: It works best for independent demand items. For dependent demand items, MRP systems may be more appropriate.

Q4: How often should I recalculate ROP?
A: Whenever demand patterns or lead times change significantly, or at least quarterly for stable environments.

Q5: Can ROP be used with just-in-time systems?
A: JIT typically aims for minimal inventory, but a calculated ROP can still help determine when to trigger replenishment.