Reorder point

The on-hand level that should trigger a replenishment order: expected demand during lead time plus safety stock.

Also searched as: ROP, reorder level, min stock trigger, replenishment point

Reorder point answers “when do we buy again?” not “how much.” Quantity to order is a separate policy (EOQ, weeks of cover, MOQ). ROP is the trigger line on the stock card.

Classic formula: ROP = demand during lead time + safety stock. If demand or lead time is volatile, safety stock rises; if suppliers are reliable and demand flat, safety can shrink.

A single-SKU shop can reorder by eye. Multi-SKU warehouses need ROP (or min/max) in the system or stockouts and overstock will both surprise you.

Daily demand with a five-day lead time

Average demand 20 units/day. Supplier lead time 5 days. Safety stock 40 units.

  1. Lead-time demand = 20 × 5 = 100.
  2. ROP = 100 + 40 = 140.

When on-hand (plus ordered-not-received, if you count supply) hits 140, raise a purchase order — do not wait until zero.

Related modules

Related terms

FAQ

Should open purchase orders reduce ROP urgency?

Yes — available-to-promise logic usually treats inbound POs as supply so you do not double-order while goods are already on the water.