Lapasar
Purchasing & Procure-to-Pay

Reorder Point

Also known as: ROP, Reorder level

The reorder point is the stock level at which a new order should be placed to replenish an item before it runs out.

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The reorder point is calculated from average demand during the supplier's lead time, plus a safety-stock buffer to cover variability. When stock falls to this level, it triggers a replenishment order — timed so the new stock arrives before the current stock is exhausted.

Setting reorder points correctly balances two risks: too low and you face stockouts, too high and you tie up cash in excess inventory. Systems can automate reorder-point triggers, and it works hand in hand with economic order quantity to decide how much to order each time.

Example

If an item sells 20 units a day and the supplier takes 5 days to deliver, with a 30-unit safety buffer, the reorder point is (20 × 5) + 30 = 130 units — order when stock drops to 130.

Frequently asked questions

What is a reorder point?
The reorder point is the stock level at which a replenishment order should be placed, calculated from demand during lead time plus a safety-stock buffer, so items don't run out.
How do you calculate the reorder point?
Multiply average daily demand by the lead time in days, then add safety stock. The result is the stock level that should trigger a new order.

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