Reorder point
The stock level at which a new order should be placed, enough to last through the lead time plus a cushion.
What it means in business
The reorder point is the usage expected during the supplier's lead time plus safety stock. When stock falls to it, you order, and the new stock should arrive just as the safety stock is about to be touched.
Example
A factory uses 40 units a day, the lead time is 10 days and it keeps 100 units of safety stock. Its reorder point is 40 times 10, plus 100: 500 units. This is an illustration of normal business use rather than a quoted case study.
How to use it correctly
Calculate it for the items that matter most, put it in the item master and review it when usage or lead time changes. Use the stock on hand plus what is already on order when comparing against it.
Common confusion
The reorder point is not the order quantity: it says when to order, not how much. An item that is regularly used up before the new order arrives has a reorder point that is too low.
Related glossary terms
Written on 24 October 2026 for lamp. Confirm the current rules with the official source or an adviser before relying on it.