| To calculate the Reorder Point (ROP), you need to take into account the following variables: Average daily demand (D): the average number of units sold per day. Lead time (L): the time it takes for a new order to arrive, including order processing, manufacturing, and shipping. Safety stock (SS): the additional inventory you keep on hand to protect against unexpected demand fluctuations or supply chain disruptions. The formula to calculate the Reorder Point is: ROP = (D x L) + SS Reorder Point Calculator |
Reorder Point (ROP) is a critical inventory management metric that helps businesses determine when it’s time to reorder products. It’s the level of inventory at which a new order should be placed to avoid stockouts and ensure that there is enough inventory to meet customer demand.
Formula
ROP = (D x L) + SS
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For Example
let’s say you sell an average of 50 units per day, and it takes 7 days for a new order to arrive. You also want to keep a safety stock of 100 units. Plugging these values into the formula, you get:
ROP = (50 x 7) + 100 ROP = 450
Therefore, your Reorder Point is 450 units. This means that when your inventory level reaches 450 units, it’s time to place a new order to avoid stockouts and ensure that you have enough inventory to meet customer demand.