Also called order point, min level, min-max
What is a reorder point?
The stock level that triggers a new order, set so the delivery arrives before you run out.
What else it is called
- Other names
- order point, min level, min-max
- In French
- point de commande
Related entries
Understanding reorder point
A simple trigger. When stock on hand falls to this level, order more. The level is set so that the quantity remaining covers normal usage for however long the replenishment takes, with the safety stock underneath it to absorb the days that are not normal.
It pairs with a separate decision about how much to order, which is where economic order quantity comes in. The two questions are independent: when to order and how much.
The failure mode is staleness. Supplier lead times drift, demand grows, and the reorder points sit where somebody set them at implementation. Reviewing them against actual lead times once or twice a year catches most of the stockouts that otherwise look like supplier problems.
How it is calculated
Reorder point = average usage per day × replenishment time in days + safety stock
Use the replenishment time the supplier actually achieves, not the one on their website.
In practice
If a part keeps running out despite a reorder point being set, check the supplier’s real delivery performance over the last year rather than the quoted lead time. The trigger is usually calculated from a number that is no longer true.
Frequently asked
What is a min-max system?
The same idea with the order quantity built in: when stock hits the minimum you order back up to the maximum. It suits parts with steady usage and is easy to run without software.