In brief
The reorder point is the stock level at which a replenishment order is triggered so that stock lasts until the goods are received.
Contents
What is Reorder point?
The reorder point links consumption and replenishment lead time. It is set so that the stock from the time of ordering is sufficient until the new delivery arrives, leaving the safety stock untouched.
The common formula is: reorder point = average daily consumption × replenishment lead time in days + safety stock. Example: with a consumption of 4 units per day, a replenishment lead time of 15 days and a safety stock of 20 units, the reorder point is 80 units. With the reorder point method, the system continuously checks the stock and generates an order proposal as soon as it falls below this value.
For spare parts, the formula reaches its limits. Many parts are only needed sporadically, so average consumption says little. For such items, fixed minimum quantities are often set, based on the number of units installed, criticality and replenishment lead time. Changes of supplier or new sources of supply also change the replenishment lead time and therefore the reorder point.
In practice: maintenance and procurement
Reorder points should be regularly compared with actual lead times, as longer replenishment lead times quickly make old values too low. For rarely needed, critical parts, a deliberately set minimum quantity usually makes more sense than a calculated value.
Synonyms and abbreviations: ROP · reorder level · order point · reorder threshold · trigger level
Frequently asked questions
How do you calculate the reorder point?
Multiply the average daily consumption by the replenishment lead time in days and add the safety stock. If 10 units are consumed daily, replenishment takes 8 days and the safety stock is 30 units, the reorder point is 110 units.
What is the difference between reorder point and safety stock?
Safety stock is a buffer that absorbs unforeseen fluctuations in consumption or lead time and is not normally touched. The reorder point is the trigger for an order. It contains the safety stock plus the expected consumption during the replenishment lead time.
Does the reorder point also work for spare parts?
For regularly consumed parts such as filters or seals, yes. For parts with very rare, irregular demand, average consumption is not very meaningful. Here, stock is more likely to be controlled via fixed minimum quantities based on criticality, installed units and lead time.