What is a reorder point?
The reorder point is a key figure that is primarily used in warehouse logistics. It is used here to optimize order quantities and order times.
As soon as the reorder level of a certain product in the warehouse is reached, this product must be reordered. The importance of the reorder point for the material flow is therefore that there are always enough goods in the warehouse. This means that production and dispatch 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 goods
- Delivery time of the goods after ordering
Calculation example:
The minimum stock of a product is 10 pieces. On average, 5 pieces of these goods are used/removed from stock per day and reordering also takes 5 days.
- Calculation: 10 + (5 pieces per day x 5 days) = 35 pieces
The reporting stock therefore amounts to 35 units.
