What is a reorder point?
The reorder point is a key figure that is mainly used in warehouse logistics. It is used here to optimize order quantities and order timing.
As soon as the reorder level of a certain good in the warehouse is reached, this good must be reordered. The significance of the reorder point for the material flow is therefore that there are always enough goods in the warehouse. Thus, the production and shipment to customers can be guaranteed.
How is the reorder point calculated?
The following information is required to calculate the reorder point:
- Daily consumption of the goods
- Minimum stock of the goods
- Delivery time of the goods after order
The minimum stock of one item is 10 pieces. On average, 5 pieces of these goods are consumed/removed per day and reordering also takes 5 days.
- Calculation: 10 + (5 pieces per day x 5 days) = 35 pieces
The reorder point is therefore 35 pieces.