Know Exactly When to Place Your Next Order
Enter your daily demand, supplier lead time, and safety stock level to calculate the inventory threshold that triggers a replenishment order.
Demand
Supply Parameters
ROP = (D x L) + SS
Reorder Point
850
units — place an order when inventory hits this level
Lead Time Demand
700
units consumed during lead time
Days Until Stockout
8.5
at current demand rate
ROP Composition
Recommended Order Frequency
Every 9 days
to maintain stock above the reorder point
The Reorder Point Formula
The reorder point is the inventory level at which you place a new order so that stock arrives before you run out. It accounts for the units consumed during lead time plus a safety buffer for variability.
ROP = (Average Daily Demand x Lead Time) + Safety Stock
The total units you expect to consume between placing an order and receiving it. If you use 100 units per day and lead time is 7 days, lead time demand is 700 units.
The buffer that protects against demand spikes or late deliveries. Without safety stock, any variation in demand or supply during lead time causes a stockout.
Reorder Point vs. Min/Max Systems
Both approaches automate replenishment decisions, but they work differently and suit different situations.
ROP (Fixed Order Quantity)
- 1.Order a fixed quantity whenever inventory drops to the ROP
- 2.Order timing varies but quantity stays constant
- 3.Works well when demand is relatively stable
- 4.Pairs naturally with EOQ for the order quantity
Min/Max (Fixed Order Interval)
- 1.Review inventory at fixed intervals and order up to max
- 2.Order quantity varies but timing stays constant
- 3.Better for items with highly variable demand
- 4.Simpler to manage when reviewing many SKUs at once
Implementation Tips
A reorder point is only useful if it is monitored and acted on consistently. Here is how to make it work in practice.
Set up your ERP or inventory system to generate a purchase order automatically when on-hand quantity hits the ROP. Manual monitoring works for a handful of SKUs but breaks down at scale.
Supplier lead times drift over time. A ROP based on stale lead time data will either cause stockouts (if lead time increased) or excess inventory (if it decreased).
Not every item needs the same rigor. Use ABC analysis to classify items and set tighter reorder points for A items (high value or high impact) while allowing looser controls for C items.